Topic Summary

Posted by: thaiga

A research agency involved in one of Thailand’s high-street bank projects, expects the baht will remain under pressure and weaken against the U.S. dollar this week.

Kasikorn Research Center forecasts the Thai currency will trade between 32.30 baht and 33.20 baht per U.S. dollar this week, when the focus will be on the Bank of Thailand’s September economic report and the Ministry of Commerce’s October Thai inflation report.

KResearch noted that the baht has weakened against the U.S. dollar to 33.09 baht per greenback last week, after the country’s exports contracted more than expected while the market has been under the pressure from a foreign investors’ sell-off of Thai shares throughout the week.

The agency added that the U.S. dollar meanwhile, has been strengthening on the back of investors’ aversion to risk from worries about the budget conflict between Italy and the European Union as well as on the Chinese economic slowdown.

It went on to say that the dollar has also been supported by better-than-expected U.S. economic data released late last week.

Posted by: Newsy

The Thailand Industries Sentiment Index (TISI) dropped in September due to concerns about a hike of oil prices and the baht's appreciation, the Federation of Thai Industries (FTI) reported on Thursday.

The survey in September showed the index stood at 91.5 points, down from 92.5 in August.

"Most business operators are concerned about oil prices, which hit US$83 per barrel in the global market. They affect the country's overall transportation cost," said FTI chairman Supant Mongkolsuthree.

"The baht strength is now a worrisome issue when compared to the currency movements in Southeast Asia countries," he added.

The FTI foresaw pressure from the prolonged trade war between the United States and China to affect export sentiment but the promised general election will push the index to 105.6 over the next three months.

The FTI index surveys 45 industry sectors, with 1,045 member businesses in the country. The index below 100 indicates declining confidence of the industry sector and above 100 demonstrates its better economic mood.

Posted by: thaiga

The baht has been a standout performer in what’s been another tough quarter for many emerging currencies. Along with an outsize current-account surplus, the country is luring investors thanks to prospects for the first interest-rate hike since 2011.

The baht has strengthened almost 2% this quarter against the dollar, the top performer among 12 major Asian currencies tracked by Bloomberg. It’s also good enough for No.2 in emerging markets, behind Mexico’s peso, which has benefited from a US trade deal. The gain takes back some of the previous quarter’s loss, when the baht put in Asia’s worst performance.

"The baht got an additional support during this quarter as the Bank of Thailand became hawkish, with the economy showing a solid recovery and inflation returning back to the central bank’s target range," said Takahide Irimura, the head of economic research in Tokyo at Mitsubishi UFJ Kokusai Asset Management Co, which managed $121 billion as of the end of June. "The currency may continue to perform well into the final quarter of the year, when tourism revenue seasonally picks up and pushes up the current-account surplus."

After years of wallowing in the "middle-income trap" -- subpar growth for countries that made the initial jump up the development ladder -- Thailand’s economy has been kicking into higher gear as its government gets going on infrastructure projects.

Prospects for a political transition have also emerged. A royal endorsement this month paved the way for a long-delayed general election, boosting hopes that spending related to the vote will lift consumption and jobs.

With growth clocking a pace just under 4% for a second straight year and forecasts for a similar pace next year, according to the IMF, inflation pressures are expected to pick up.

The baht reached a three-month high last week after the Bank of Thailand said the need for accommodative policy is expected to decline. Two of seven voters on policy favoured an immediate hike in the 1.5% benchmark rate.

The nation’s current-account surplus of nearly 10% of gross domestic product has also provided support in a period of emerging-market rout triggered by selloffs in Turkey and Argentina.

Foreign investors poured almost $3.5 billion net into the Thai bonds since the quarter began, and though they pulled some out of equities, the SET Index has been the best performer among major Asian markets, headed for its biggest quarterly rally since 2013.

Bank of Thailand governor Veerathai Santiprabhob signalled on Monday that policymakers will be careful not to hurt growth prospects if they do raise rates, with a pause likely after any such move.

Posted by: thaiga

Concerns about Britain's plan toleave the European Union sent the pound to an 11-month lowagainst the greenback on Monday, while U.S.-China trade tensionshelped boost the U.S. currency.

"Some of the political noise we're been receiving across thepond reintroduced the Brexit discount into sterling," said MazenIssa, senior FX strategist at TD Securities in New York.

The pound GBP= fell as low as $1.2917 before retracing to$1.2940, down 0.50 percent on the day.

Worries that Italy will ramp up spending and challengeEuropean Union budget rules, and a drop in German industrialorders in June, also weighed on the euro. urn:newsml:reuters.com:*:nL5N1UU1K1urn:newsml:reuters.com:*:nL5N1UX0ZJ

The euro zone single currency EUR=EBS fell to a five-weeklow of $1.1527 before rising back to $1.1552, down 0.13 percent.

Since mid-April, the dollar index .DXY has gained 6percent while an emerging-market local currency bond exchangetraded fund LEMB.K has fallen more than 10 percent over thesame period.

Against a broad basket of currencies .DXY , the dollar waslast up 0.24 percent to 95.367. It is within striking distanceof a more-than-one-year peak of 95.652 reached on July 19, whichis also seen as having technical resistance.

The main U.S. economic focus this week will be Friday'sconsumer price inflation report for July, which is expected toshow a 0.2 percent increase in core inflation in the month,according to a Reuters poll.

Posted by: thaiga

The baht could go up or down this week as the world economic outlook remains clouded by uncertainty over a US-China trade spat.

The currency slightly appreciated to 33.18 baht against the greenback on Wednesday and Thursday before shedding 29 satang to close at 33.47 on Friday, the Bank of Thailand reported, citing the average rate quoted by commercial banks.

CIMB Thai Bank predicted the baht to move between 33.10 and 33.60 this week, saying its direction could be determined by sentiments over the trade conflict between the United States and China.

The top two biggest economies are locked in a tit-for-tat tariff dispute, with Beijing threatening to retaliate against Washington by imposing levies on US goods.

Ministers attending the Association of Southeast Asian Nations in Singapore have voiced concern about the dispute's impact on global trade.

The Monetary Policy Committee will hold a meeting on Wednesday, and CIMB Thai and Kasikorn Research Center both expected no change in the policy rate.

The Bank of Thailand has kept its benchmark interest rate at 1.5% since 2015 to help drive economic growth. But the central bank said it planned to tighten monetary policy as the economy continued to expand.

Posted by: thaiga

THE BAHT is expected to reverse course in the next few months, and the central bank is likely to raise the key interest rate in September, Tim Leelahaphan, an economist at the Standard Chartered Bank Thailand, has forecast.

Closely monitored risk factors to the economy include trade tensions and the impact of the boat tragedy in Phuket earlier this month on the tourism industry.

The baht would strengthen to Bt32.5 per US dollar from the current level of Bt33.5 per dollar by the end of the year, he said.

The dollar has been boosted recently by the expansion of the US economy and the rate hike by the US Federal Reserve. But large spending and tax cuts by the US government will lead to a larger budget deficit, which would weaken the US government’s financial position, he said.

A larger budget deficit would lower confidence in the US dollar causing it to weaken, he predicted.

He also predicted that the Bank of Thailand was unlikely to defy the trend of rising interest rates. The central bank’s Monetary Policy Committee recently changed its tone about the policy rate. They have started to discuss rate normalisation after keeping a historically low rate of 1.5 per cent so long, he said.

The central bank is likely to raise interest rate twice this year, by 25 basis points each time, to 2 per cent by the end of the year.

Another key reason for the rate hike is that the central bank will choose a gradual rate hike rather than a sharp increase later in order to avoid market jitters, he argued.

As the economic growth moves towards a broad-based growth, it could accelerate inflation, he warned.

He pointed out that Standard Chartered’s forecast differs from the consensus view that the central bank will keep the policy rate on hold for the rest of the year and will start to raise the rate next year.

Finance Minister Apisak Tantivorawong was also against an early rate hike, as he feared it would adversely affect consumers.

Tim believed that pressure from Apisak would not prevent the central bank from increasing the rate.

“Apisak also conceded that it is the responsibility of the central bank regarding interest rate policy,” Tim said.

Standard Chartered has forecast economic growth rate of about 4.3 per cent this year, compared with 4.5 per cent projected by the Finance Ministry.

Upside risk could be possible if the government makes clear in September about the date of the next general election.

The lifting of the political ban will lead to political campaigns across the country and that could boost consumer spending, especially upcountry, he said.

He was optimistic that the trade dispute between the United States and China would not get out of hand.

He, however, said close monitoring is needed to see how the trade disputes would play out.

Some analysts believed that trade tensions could escalate into a full-blown trade war as US President Donald Trump recently made a fresh threat to impose tariffs on Chinese goods worth US$500 billion.

The International Monetary Fund has warned that the trade dispute between the US, with major economies China, Europe, Mexico and Canada could slash global economic growth by 0.5 percentage points by 2020. It maintained its global economic growth forecast at 3.9 per cent this year but said trade volume would be less than expected, rising 4.5 per cent against its previous forecast of 4.8 per cent.

Another risk factor is the fallout from the boat tragedy in Phuket on the tourism industry, as more than 40 Chinese tourists lost their lives.

Tim said he did not think it would have a big impact on Chinese tourist arrivals.

Posted by: thaiga

The Bank of Thailand expects baht fluctuations to continue, but in a limited range, due to the Federal Reserve's interest rate hikes, trade barriers, and the European Central Bank's plan to stop bond purchases.

BoT governor Veerathai Santiprabhob said Tuesday that other factors to a volatile baht included midterm elections in the United States which could have impacts on US trade barriers and thus worldwide financial and equity markets.

The private sector must manage currency risks, he said.

"In the past few days, regional currencies fluctuated wildly, especially the yuan, the currency of a targeted country in the trade war," the BoT governor said.

However, impacts on the baht would be limited because Thailand depended less on foreign currencies, had huge foreign-exchange reserves and continuously posted current account surpluses, Mr Veerathai said.

Posted by: thaiga

While the currency's decline was high for a two-month period, its first-half fall was par for the region

The baht depreciated against the US dollar at a faster pace than its regional peers in Asia over the past two months, weighed down by external uncertainties, and its downward trend is expected to continue, says a senior central bank official.

Offshore fund outflows resulted from the more hawkish stance than expected of the US Federal Reserve, dividend repatriation of multinational companies and the Sino-US trade spat contributing to the baht's weakness, said Don Nakornthab, the Bank of Thailand's senior director of the economic and policy department.

The baht and the South Korean won were the best-performing currencies in Asia last year, but they fell 3% versus the greenback from the end of May to June 22.

The baht's volatility -- a 6.2% drop between the beginning of this year and June 22 -- was in line with the region's showing.

The baht on Friday weakened to 33.19 to the dollar from 33.12 on Thursday. Year-to-date, the baht dropped 1.8%, outperforming the won, which lost 4.5%, the Indonesian rupiah (down 5.7%), the Philippine peso (down 6.5%) and the Indian rupee (down 7.2%).

Based on the baht's downward trend, the country's international reserves could decline to 3.4 times short-term debt from 3.5 times in May, but the level is still considered high enough to provide a cushion against any shocks, Mr Don said.

Thailand's international reserves fell to US$209.7 billion (6.9 trillion baht) as of June 22 from $211.5 billion a week ago and $212.3 billion as of June 8.

According to Bank of Thailand data, its foreign portfolio showed a net outflow of $1.85 billion in May, up from $1.37 billion in April, cashing a net of $4.1 billion from Thailand year to date. Of the total $1.85 billion, $1.67 billion was pulled out of the stock market and the remainder from bonds.

Mr Don said the baht's retreat could hurt the country's imports, particularly in capital goods, machinery and equipment products, while private investment remains promising, with capacity utilisation at 69.4% in May, reaching the highest level since September 2017.

The baht's depreciation could also benefit the country's exports.

The central bank forecasts double-digit growth for the first half of the year. The country's outbound shipments surged 11.3% for the first five months, while growing 13.1% in May.

The Commerce Ministry and the Bank of Thailand use a different base for export and import data. The former uses customs-cleared figures, while the latter uses payment-based numbers.

"The export growth rate is expected to moderate in the second half because of the high-base effect," Mr Don said. "Even if there is no trade war, global trade will slow down from the latter half, in line with the global economic outlook."

The central bank said the country's economic outlook and monetary conditions continued to gain traction in May, thanks to strong exports and domestic demand.

Merchandise exports expanded on the back of strong external demand and a rise in global crude oil prices, while domestic demand expanded robustly.

The expansion in external and domestic demand was attributed to the growth in manufacturing. Robust growth was also spotted in public spending and private investment, while the tourism sector continued to grow.

Posted by: thaiga

The baht, set to become the worst-performing currency in emerging Asia this quarter, doesn’t look like it’s going to bottom anytime soon, according to Mizuho Bank Ltd.

Foreign funds have pulled a net $3.8 billion from the nation’s equity market since the end of March, the most since at least 1999 on a quarterly basis, amid concerns that an escalation in trade frictions between the US and China will weigh on Thailand’s current-account surplus -- a source of attraction for the country’s currency bulls.

The baht had been the second-best performer in emerging Asia in the first quarter, underscoring the spread of the rout in developing economies to countries with relatively strong fundamentals.

Central banks in emerging markets -- from Argentina to Turkey -- have gone on the defensive as a stronger dollar and rising Treasury yields fuelled concern that a failure to tighten monetary policy risks a currency sell-off and an acceleration in inflation.

“The market’s focus has shifted to trade frictions and the currencies of economies with high dependence to trade are becoming more vulnerable to sell-offs,” said Masakatsu Fukaya, an emerging-market currency trader at Mizuho Bank. “My view is that the dollar will remain strong for a while. People are becoming concerned that a trade war will lead to overall shrinkage in global trade, so that could potentially threaten Thailand’s current-account surplus.”

The baht has weakened almost 6% against the dollar this quarter to trade at 33.10 as of 2.15pm in Bangkok Thursday. Overseas investors withdrew net $251 million from the bond market since the end of March, the first net quarterly outflows since the last three months of 2016, according to data from the Thai Bond Market Association.

“Factors that supported the first-quarter gains are now turning around to bite the currencies of export-oriented economies,” Mizuho’s Fukaya said. “We may even see the baht test the 33.50 level.”

Posted by: thaiga

The baht will test its seven-month low this week as foreigners continue to move out of the currency on higher interest rates and an improved economic outlook in the United States.

The baht continued to slide, ending last Friday at 32.91 to the dollar, a drop of 1.73% from a week before, according to the Bank of Thailand.

The Kasikorn Research Center said the currency was approaching its seven-month low of 33 against the greenback and could reach that point this week.

It predicted the baht would stay in the range of 32.80-33.40 to the dollar during the coming week.

The baht's depreciation was due to continued foreign outflows from Thai stocks and bonds after the US Federal Reserve raised the benchmark lending rate and amid worries about trade wars between the US and its trading partners.

The US central bank increased the Fed funds rate on June 13 to a range of 1.75%-2.0% and signalled more hikes before the end of the year.

Last week, foreign investors were net sellers of 13.8 billion baht from the Stock Exchange of Thailand. They have moved 176 billion baht out of Thai stocks since the beginning of the year.

US economic data to be released this week, including first-quarter gross domestic product, could apply additional pressure on the baht, the research arm of Kasikornbank said.

Posted by: thaiga

The Bank of Thailand (BOT) on Monday said there was no need for alarm over a news report concerning its foreign reserves, explaining that that the valuation loss that had been made was the natural result of its responsibility for currency stability during a period of baht appreciation.

In response to news on social media involving the central bank’s loss, BOT assistant governor Chantavarn Sucharitakul denied that it had engaged in currency speculation. However, the BOT had bought foreign currency in order to prevent the baht appreciating too quickly, she said.

The increase in foreign reserves followed an influx of foreign capital as a result of several consecutive years of current-account surpluses and foreign direct investment, she said.

When the baht appreciates, a valuation loss occurs in regard to the country’s foreign reserves, whereas there is there is a valuation gain when the baht weakens, the assistant governor explained.

When the economy improves and the currency tends to strengthen, the central bank usually registers a valuation loss, but if the economy worsens and the baht depreciates, it normally records a valuation gain, she said.

At the end of last year, the BOT had about US$240 billion (Bt7.64 trillion) in foreign reserves.

If the Thai currency appreciated by Bt1 against the US dollar, the BOT would have an instant valuation loss of Bt240 billion on such a level of reserves.

On the other hand, if the baht depreciated by Bt1, the central bank would make an immediate valuation gain of Bt240 billion, Chantavarn said.

She was also at pains to explain that the foreign reserves were still in the form of foreign currency, which was something that did not deteriorate, unlike like agricultural products or commodities as the social-media reporting had compared them to.

Posted by: thaiga

A seasonal downturn in the baht driven by dividend outflows and a lack of tourists could be worse than usual this year amid rising global bond yields and less liquidity, according to Kasikornbank.

A dropoff in tourists after the Songkran festival in mid-April and payouts to foreign stock investors usually spell declines for the currency in May. Last year was the first time the baht managed to rally in that month since 2009.

Rising developed-market bond yields and the gradual winding down of stimulus by the European Central Bank could prompt overseas investors to rebalance their portfolios away from emerging markets like Thailand, said Kobsidthi Silpachai, head of capital market research at Kasikornbank.

“The baht may see bigger downward pressure this year than usual,” he said. “Many clients are asking about this dividend season, while exporters are hoping for some light at the end of the tunnel.”

A decline in the baht may provide some relief to exporters who have complained about an 11% rally against the dollar over the last 12 months. Some 87 billion baht ($2.8 billion) of stock dividends will be paid out to non-resident investors in April and May this year, Kasikornbank estimates.

If the dollar rises beyond its 50-day moving average against the baht, that could open the way for the Thai currency to test its support area between the March 2 low at 31.587 and the 31.638 trough on Feb 22. Beyond that, the next support lies at the low of 31.957 reached on Feb 9.

Posted by: Johnnie F.

Europeans and Brits can keep breathing, they get a little more now for their Euros and Pounds, but Americans still need to keep the belt a little tight, though Happy Donald keeps boasting how much he has done for the economy, probably mistaking business owners' profit interests as the economy. The Fed is expected to keep the dollar inflation rate accelerating by raising the interest rates not only three but four times this year..

Bank of Thailand (BOT) governor Veerathai Santiprabhob vowed on Friday to keep the baht secure against the weakened US dollar and said the baht and other regional currencies would regain strength more quickly than normal.

“The BOT is ready to review additional measures to safeguard the baht against any abnormal currency movements,” he said.

The baht on Friday opened at 31.44 per US dollar, a 50-month high going back to October 2013. It also trade Bt31.35 per US dollar in this morning.

Posted by: thaiga

In a rare move, the Bank of Thailand has threatened to investigate some financial institutions with operations in Thailand for possible involvement in baht speculation.

The central bank's announcement comes amid the baht's continued rally against the US dollar. The local currency, up nearly 2% versus the greenback in 2018, is now the second-best performer in Asia this year after the Malaysian ringgit.

The central bank has found that some financial institutions' behaviour could indicate involvement in baht speculation through heavy transaction volume, said Bank of Thailand governor Veerathai Santiprabhob, who added that such practices have been done in favour of customers who may be speculating in baht.

Regulators need to launch an in-depth examination of such activities and consider tightening the rules to thwart speculators, Mr Veerathai said without mentioning any names.

He said the speculative activities were unlike the ones in the past that prompted the central bank to require financial institutions to monitor and report the activities of non-resident (NR) accounts.

Each foreigner who puts money in a non-resident baht account (NRBA) is prevented from holding the outstanding balance in all accounts opened at domestic financial institutions at more than 300 million baht at the end of day.

An NRBA, with the exception of a fixed account with a maturity of six months or longer, normally offers no interest to account holders.

The NRBA and the non-resident account for securities (NRBS) are among the central bank's measures to prevent foreigners from speculating in baht.

Other measures include a restriction on baht liquidity, curbing capital inflows and non-deliverable forward (NDF) -- similar to a regular forward FX contract but not requiring physical delivery of the designated currencies at maturity.

Mr Veerathai has repeatedly said that the baht's strength this year could be due to the US dollar's slump against other major currencies.

Thailand's high current account surplus and offshore fund inflows to the local bond market could also be contributing to the baht's strength, he said.

The US dollar is down about 2% to the euro since the start of the year.

The stronger baht, however, is in line with firming regional currencies, Mr Veerathai said.

"The Bank of Thailand is closely monitoring fund inflows to short-dated bonds, but no irregularity has been found," he said. "The central bank will continue to keep the existing measure of downsizing short-term bond issuance in place."

The central bank began tapering its new short-term bond supply in April last year after hot money was spotted flowing into short-dated notes, resulting in the baht's rapid appreciation.

Mr Veerathai said the baht's strength is unlikely to deal a direct blow to Thai exports, though exporters' income could ebb.

Foreign exchange rates will not have a direct impact on goods pricing, he said, as value-added products, productivity and business potential all play a role in honing competitive edge and increasing Thai business operators' price-setting power.

Mr Veerathai said the time is right for business operators to import equipment and machinery, as their costs will be lower in baht terms and such investment will help beef up competitiveness.

Thailand's economic recovery and current account surplus, which could continue to rise above US$40 billion (1.3 trillion baht) this year, are factors driving the baht higher, Kasikorn Research Center (K-Research) said in a note.

The baht's value is expected to continue appreciating in the first months of this year, reflecting movement of capital inflows and market sentiment about Thailand's economic fundamentals and recovery impetus, K-Research said.

Despite how global financial markets are fixated on the US Federal Reserve's interest rate normalisation, this is not the sole factor affecting the local currency's value, as other factors have to be taken into account, the research house said. Factors include Thailand's current account surplus, political developments in the US and geopolitical issues.

"Although [the Bank of Thailand's] monetary policy remains in an accommodative stance to support a recovery in domestic economic activities, it has to be admitted that the yield of the Thai bond market, particularly long-term yield, could rise in line with the direction of foreign bond yields," K-Research said.

Posted by: thaiga

The Thai baht rose to 32.81 per dollar on Monday, its highest since April 2015, driven by strong third quarter economic growth data.

Thailand's economy expanded at its fastest annual rate in 4½ years, although the quarterly pace slowed, indicating monetary policy will likely remain loose to support still-sluggish domestic demand.

"Thailand's third-quarter GDP released this morning was fairly strong so we see the baht staying fairly stable," Mizuho Bank's Chang said.

The baht firmed fractionally after the GDP news, gaining up to 0.09%.

Most Asian currencies were muted on Monday in the face of political uncertainty in Germany and lingering doubts about the prospects for US tax reform, dimming sentiment.

The dollar index, which measures the greenback against a basket of six rivals, was up 0.3% as the euro slid, hit by German Chancellor Angela Merkel's failure to form a three-way coalition government, increasing the level of political uncertainty.

Merkel said on Monday she would meet the German president to inform him that she had failed to form a coalition government with the Greens and the pro-business Free Democrats (FDP) after the FDP unexpectedly pulled out of the coalition talks.

Recently, the dollar has been weighed down by uncertainty over US tax policy, notably cuts for business and the wealthy.

While the baht hit its highest in more than 2½ years, the Malaysian ringgit was up 0.1% at its highest for more than a year. The ringgit continued its gain after data on Friday showed that Malaysia's economy expanded in the third quarter at its fastest pace in more than three years, raising expectations of a interest rate hike at the central bank's next policy meeting in January.

"Even though we see a bit of a euro weakness having an impact on Asian currencies, there is also quite a bit of positivity within Southeast Asia where we have quite strong gross domestic product (GDP) growth numbers coming through from Malaysia and the Philippines that is likely to be quite supportive of these two currencies - at least in the near term," said Wei Liang Chang, FX strategist at Mizuho Bank.

"So markets are likely to be paying attention to idiosyncratic factors especially given that you have quite a good story coming out of Asia."

Losses in the region were led by an 0.2% decline in the South Korean won, and the Singapore dollar that slipped 0.2% because of the fall in euro.

The Indian rupee fell 0.15% after having led gains in the region in its previous session after Moody's Investors Services upgraded its ratings on India's sovereign bonds on Friday.

The Taiwan dollar was marginally higher ahead of balance of payment data due later in the day, while the Chinese yuan ticked 0.1% lower.

Posted by: Johnnie F.

The Finance Ministry will let foreign state agencies and companies apply for baht-denominated bond issuance as a special case from Sept 6 to Oct 6, a move expected to help curb the baht's rapid gain.

Foreign entities that win Finance Ministry approval must issue the baht bonds with a maturity of up to three years between Nov 1, 2017 and March 31, 2018, the Public Debt Management Office (PDMO) said in a release.

The issuers will be allowed to use the proceeds only in domestic transactions in baht terms and for onshore spot exchange.

The ministry will open applications for foreign entities to offer baht-denominated bonds three times a year: in March, July and November.

An informed source at the Finance Ministry said the special period for baht bond applications is in line with the initiatives of Finance Minister Apisak Tantivorawong, since he believes that letting foreign entities issue baht bonds will help stem the sharp appreciation of the baht, as bond issuers must convert proceeds to US dollars.

But the issuance size depends on the Finance Ministry's discretion, the source said.

The baht is among the top-performing currencies in Asia, up 7.7% year-to-date, according to Bloomberg data. In comparison, the Japanese yen has surged 7.9%, the Singaporean dollar 7.6% and the Taiwanese dollar 7.4% since the start of the year.

In related news, the PDMO said the Finance Ministry has approved the issuance of baht-denominated bonds by the Lao government and Nam Ngum 2 Power Co.

Both foreign entities are required to issue the baht-dominated bonds or debentures in Thailand by May 31, 2018, and must use all proceeds from the debentures according to the terms and conditions specified by the Finance Ministry.

Posted by: Johnnie F.

The Thai Baht isn't getting stronger at all! Euro and Pound are also gaining against the Baht, though by far not as much as the Dollar is loosing. Investors are loosing confidence in the US economy, since the president proves unable to fulfill his promises.

Posted by: thaiga

The Thai baht closed at 33.66 baht against the US dollar, the strongest in 25 months after the currency was trading between 33.73-33.75 baht/dollar throughout Monday (July 17), said Jitipol Puksamatanan, a currency and capital markets strategist of the Krung Thai Bank.

He attributed the quick strengthening of the Thai baht to massive sale of US dollars coupled with the inflow of foreign capital, including fund flow for the takeover of LH Bank.

Mr Jitipol noted the quick strengthening of the baht coincides with the weakening of the US dollar which is unlikely to get stronger while the Bank of Thailand is reluctant to intervene.

He predicted that the Thai baht would get stronger next week to 33.60 baht/dollar and may rise to 33.50 baht/dollar if fund flow continues to pour into the country.

Posted by: thaiga

The baht has slightly weakened after the US Department of Labour reported on Friday that the US economy had added 222,000 new jobs in June. The US job growth was greater than expected.

The Thai currency weakened yesterday to slightly over 34 per US dollar after it strengthened to over 33 per dollar on Monday.

Amonthep Chawla, head of the research office at CIMB Thai Bank, said the easing might be temporary and the baht would be volatile looking ahead. The market is waiting to see data on the US gross domestic product in the second quarter and what the Federal Reserve would do about its huge balance sheet, he said. Thai exporters have previously complained about a strong baht, fearing it would drag down exports in the second half of the year. Appreciation of the baht would make Thai products more expensive in the global market.

Posted by: thaiga

A strong baht is expected to hurt inbound tourism by driving up the cost of travel and narrowing industry margins, say public and private players in the tourism sector.

The Tourism and Sports Ministry revealed yesterday the baht in the year to date has appreciated by 14% against the pound sterling, 8% against Malaysia's ringgit, 5% against the euro and 2% against the US dollar.

Bucking the trend was the Russian ruble, up by 20% against the baht during the first five months of the year as arrivals from Russia grew by 31%.

The ministry expects the ruble to continue climbing during the second half of the year.

The baht's appreciation has been driven by internal factors.

The export sector, for example, jumped by 5.7% between January and April to a total value of US$73.34 billion.

External factors, however, like Brexit, a sluggish Malaysian economy and US policies under President Donald Trump, have also played a part.

"Appreciation increases the price of staying in Thailand, which may make some foreign tourists hesitant about booking trips," said Pongpanu Svettarundra, permanent secretary of the Tourism and Sports Ministry.

Compounding the strong baht is the ongoing air traffic blockade on Qatar, which may halt tourism from the Middle East, and affect many connecting flights from Europe.

The ministry says, however, that travel between Thailand and the Middle East may remain unchanged, as major airlines -- including Qatar Airways -- are still operating as usual.

Some 4.4% of tourists from Thailand arrived on a flight from the Middle East.

Visitors from Arab countries usually travel with family and seek out medical treatment here.

Ittirit Kinglake, president of the Tourism Council of Thailand (TCT), said that despite the former factors he is ''optimistic that Thailand will attract the 34 million tourists which the council projects for this year".

During the first five months, 14.61 million foreign tourists visited Thailand -- a 3.2% increase from the same period last year. Visitors have spent 747.07 billion baht in the country so far this year.

By contrast, locals made 45.14 million domestic trips and generated income of 305.38 billion baht for the economy in the same interval.

Hotel operators in Bangkok said the high season will likely begin in late November or early December, judging from advance booking made from overseas markets.

Posted by: thaiga

Executives of commercial banks have forecast that the baht currency will likely fluctuate more than last year mainly due to the uncertainty about the policy of the new US President.

Executive of Kasikornbank Kiit Charornkitchaichana said the US politics was the key factor affecting the Thai currency during this period. This year, the baht will have a tendency to fluctuate either by depreciating and appreciating quickly. The bank therefore forecast the baht’s value this year will stay around 35-37 baht to the USD, said the executive.

Meanwhile, TMB Analytics of TMB Bank has predicted that this year’s baht currency will be on the depreciation side although it appreciated against the USD in the last two weeks. This baht appreciation was the result of USD currency speculation, said the bank.

TBM added that the Thai economy and other economies in the Asian region will rebound this year, leading to capital inflows. The baht will likely move between 35.50 – 36.80 baht to the USD.

Posted by: thaiga

The Bank of Thailand held its key interest rate near a record low for a 13th straight meeting on Wednesday, opting for stability as the prospect of higher US borrowing costs weighs on Asian currencies and clouds the outlook for growth.

The one-day bond repurchase rate was kept at 1.5%, with monetary policy committee members voting unanimously in favour, the central bank announced.

All but one of 25 economists surveyed by Bloomberg predicted the decision.

Emerging nations are contending with capital outflows after the US Federal Reserve last week raised rates by a quarter-point and signaled three more increases may be warranted in 2017.

Thailand's export-reliant economy is growing at the slowest pace among its peers in Southeast Asia.

"The BoT will want to keep interest rates low to support the economy, which looks to have started the fourth quarter on a softer note,” Krystal Tan, an economist at Capital Economics in Singapore, said in a note. “With inflation set to remain benign, we expect the BoT to stay on the sidelines and keep its policy rate on hold” throughout 2017.

Biggest Loser

The SET index was little changed as of 2.10pm in Bangkok, while the baht was up 0.1% to 35.99 per dollar. The baht has been among the biggest losers in Asia in the past month, dropping 1.4% against the dollar.

Thailand’s economy struggled to gain traction this year as moderating consumer spending and a slump in trade curbed investment. Growth weakened to 3.2% from a year ago last quarter. Consumer prices rose 0.6% in November from a year earlier.

The central bank said it “assessed that the Thai economy would still be facing greater uncertainties going forward, particularly the fragile global economic recovery and uncertainties in the economic and monetary policy directions of major advanced economies that might induce greater capital flow and exchange rate volatility.”

Policy makers retained their 3.2% growth forecasts for 2016 and 2017 and predicted exports will stop falling next year. Inflation is projected to return to the 1 percent to 4% target by the first quarter.

“Unless domestic demand in Thailand falters and inflation eases, we do not foresee a rate cut,” Tim Leelahaphan, a Bangkok-based economist at Maybank Kim Eng Securities Thailand Pcl, said before the decision. “More likely, rates have upside risk to stem portfolio capital outflows caused by any Fed monetary tightening.”

Posted by: thaiga

THE EXPECTED policy-rate increase by the US Federal Reserve next month would result in the baht deprecating for at least two quarters consecutively, and Thai companies that plan to raise finances from bonds would face rising funding costs, according to Bank of Ayudhya (Krungsri).

The market predicts that the Fed will increase its benchmark interest rate by 25 basis points in December, and Krungsri has the same view, said Tak Bunnag, head of the bank’s Global Markets Group.The bank expects the Fed will rise the policy rate twice in 2017, ending up at 1 per cent from 0.25 per cent currently.Tak forecast that a rate increase would result in the baht depreciating over the next two quarters before turning to appreciation in the second half of next year after the market sees clearer policies from US President-elect Donald Trump.The baht against the dollar at the end of this year is expected to be 35.75.

The baht in the first quarter of 2017 is expected to be 36, and 35.75 in the second quarter. In the third quarter of 2017 it is expected to reach 35.50 and 35.25 in the fourth quarter, according to the Global Markets Group. Tak said a Fed rate increase would also drive yield curves and increase the funding costs of bond issuers, while banks would face rising funding costs too.

Krungsri believes that the Bank of Thailand’s Monetary Policy Committee (MPC) will keep its rate of 1.5 per cent throughout next year, although fund-flow movements in Thailand and elsewhere in Asia are factors to be further monitored because of their possible influence on the Kingdom’s interest rates.

Tak said bond issuers who planned tenors of five to seven years would face rising costs but at the same time their bonds would attractive to investors as the interest rates of deposit products in Thailand are expected to decrease further. This should be a win-win situation for both bond issuers and investors, he added.He said banks that were arrangers of bond issues should balance the expected issuers and investors, while the Global Markets Group was active in consulting Japanese companies in Thailand about investing in the Thai bond market because of Japanese companies’ earlier preference for deposit products.Even if the funding costs from issuing bonds were increased, large companies would still look at capital markets as an option for them apart from bank loans.

Thai companies have managed their risks well, while banks have been conservative in approving loans amid the economic uncertainty, although they still support lending to Thai corporates that are able to grow here and overseas.Krungsri believes that the debt capital market and bank loans will still be funding sources for Thai corporates.The Global Markets Group plans to grow in four segments – Japanese firms in Thailand, multinational companies, financial institutions, and Thai companies.

Krungsri is a member of Mitsubishi Financial UFJ. Tak said the bank was increasing its role in encouraging Thai investors including financial institutions to put more money into Japanese government bonds.He said the bank would also leverage Japanese firms’ knowledge of risk management to help Thai companies better manage risk amid financial-market volatility.

Posted by: captcraig2

Posted by: thaiga

Thailand’s central bank is concerned further appreciation of the baht will hurt exporters and damage the nation’s economic recovery.

The currency advanced to the strongest level in 13 months last week as overseas investors boosted their holdings of the country’s stocks and bonds this year. Exports have contracted in 16 of the past 18 months, prompting Prime Minister Prayuth Chan-ocha to increase spending to counter the slump. The currency has also rallied as investor confidence was bolstered by the peaceful approval of a new constitution in an Aug. 7 referendum.

“To date, the appreciation of the baht might have dampened the cash flows of Thai exporters,” Bank of Thailand Assistant Governor of Financial Markets Chantavarn Sucharitakul, said in an e-mail interview. “Further strength in the baht might also derail the recovery of the Thai economy – a concern which the Bank of Thailand has to monitor closely.”

The baht was at 34.72 per dollar as of 10:35 a.m. in Bangkok, having gained 3.8 per cent this year. It appreciated to 34.50 on Aug. 19, the strongest since July 2015.

Funds based overseas boosted their holdings of the nation’s stocks and bonds by US$13.3 billion (RM53.7 billion) this year, according to exchange data. Emerging-market currencies, including the baht, have rallied on optimism that global central banks will keep monetary policy accommodative to support growth.

“Given that the inflows are externally driven, the reversal process is inevitable and the best that a recipient economy can do is to ensure that it is resilient and sufficiently well balanced to be able to absorb shocks, emanating from both sides be they inflows and outflows,” Chantavarn said.

Thailand’s economy grew more in the second quarter than analysts predicted, expanding 3.5 per cent from a year earlier, the National Economic and Social Development Board said last week.

The authorities are resorting first to “verbal intervention” to restrain excessive appreciation of the baht, said Charlie Lay, a currency analyst at Commerzbank AG in Singapore. Another option is to relax foreign-exchange regulations further to encourage capital outflows, he said. The central bank in July allowed investors with assets greater than 100 million baht to invest in securities and derivatives overseas without going through a Thai intermediary.

“The bottom line is they’ll probably want to keep the Thai baht stable on a relative basis against its major trading partners,” Lay said. The currency will weaken to 35.4 per dollar by year-end, according to the median estimate in a Bloomberg survey. — Bloomberg

Posted by: thaiga

Forecasts from KBank point to the baht weakening against the greenback by the end of the year. Looming interest rate hikes in the United States and the potential of the U.K leaving the European Union are to blame.

The bank’s capital market research department asserts that the baht will weaken in the second half of the year as global uncertainties push the currency downward.

Immediate forecasts have the baht retreating to 35.50 versus the USD in June, falling to 36 versus the greenback in July, and reaching 37 versus the dollar by the end of the year. Siam Commercial Bank also forecasts the baht falling to 37.

The baht has fallen slightly from Monday’s 35.21/35.23 to 35.28/35.30 on Tuesday.

KBank believes that the United States will increase interest rates twice this year, starting with a hike in July. Offshore funds have increased greatly in Asia, with foreign holdings of Thai bonds skyrocketing from 40 billion baht to over 140-billion-baht last week.

The Bank of Thailand may hold off on raising interest rates from the current 1.5% level due to a downward trend on the baht. The downward trend further reduces pressure on investors that were anticipating an interest rate hike.

The SET index target for the end of the year has been revised upward from 1,350 – 1,470 to 1,400 – 1,500 points by Kasikorn Securities. The increase follows Thailand outperforming expectations and realizing 3.2% Q1 growth year over year. Economic momentum is slated to continue as the government rolls out megaprojects and implements stimulus measures.

Posted by: thaiga

Bank of Thailand (BOT) Governor Wirathai Santipraphop said the baht has depreciated since the US dollar sharply rose under the United States Federal Reserve's policy.

Although the weakened baht remains in line with the fluctuations of regional currencies, the BOT will see to it that the baht will not fluctuate too much to avoid adverse impacts on the national economy, he said.

The BOT governor added that the number of banknotes has decreased because not so many have been newly printed and more people have turned to E-payment.

Posted by: thaiga

The baht rose on Monday after Southeast Asia’s second-biggest economy expanded more than analysts estimated, spurred by the government’s increased spending.

The currency climbed 0.3% to 35.366 per dollar as of 4.14pm, halting a five-day loss, according to data compiled by Bloomberg. It was the baht’s biggest gain since April 29. The SET Index increased 0.2%.

Prime Minister Prayuth Chan-Ocha has issued a series of stimulus measures worth more than 400 billion baht since last year to help shore up local demand. The Bank of Thailand last week left its benchmark interest rate unchanged for an eighth straight meeting to help support growth.

Gross domestic product increased 3.2% in the three months through March from a year earlier, the National Economic and Social Development Board reported Monday. That compares with the 2.8% median estimate in a Bloomberg survey.

“The much stronger-than-expected data provides support for the baht,” said Kozo Hasegawa, a Bangkok-based currency trader at Sumitomo Mitsui Banking Corp. “With this data, speculation of a further rate cut is probably fading a bit, however downside risks to growth remain.”

The baht may trade between 35.25 and 35.55 per dollar this week, said Hasegawa. The 10-year bond yield rose two basis points to 1.82% and the two year climbed one basis point to 1.38%.

Posted by: thaiga

The baht rose to a two-month high on Friday and is poised to halt a run of monthly losses as global funds returned to the nation’s bonds.

Overseas investors pumped almost $1 billion into Thai debt in January following two straight months of outflows, as a rout across world stock markets boosted demand for the relative safety of fixed-income securities. In a bright spot for the currency, the current-account surplus is forecast to have widened in December to the second highest monthly reading of 2015, while the government is predicting record tourist arrivals this year.

Posted by: thaiga

The baht halted a 10-week loss as investors returned to the nation’s assets following decisions by the Thai and US central banks to keep interest rates unchanged, maintaining the yield advantage of local bonds.

Posted by: thaiga

US ECONOMIC data released last week and developments on the domestic political front sent the baht to a six-and-a-half year low at more than 36 per US dollar yesterday.

"The market now believes that the United States' central bank might have a greater probability of increasing its interest rate this month following the US' announcement that its unemployment rate has declined to 5.1 per cent while average income per hour has also increased more than expected," Chirathep Senivongs Na Ayudhya, spokesman for the Bank of Thailand, said yesterday.

Posted by: thaiga

Baht fluctuations, we've suffered some time now lets hope we've seen the worst

China's currency devaluation: Thailand's economic nightmare?

Yesterday, the People's Bank of China cut the value of its currency for the second day in a row. Analysts now estimate that the yuan has depreciated more than 3 per cent against the US dollar, having already dropped 1.8 per cent when China "threw a curveball" the day before. Most media called it a surprise move, but observant economists had seen it coming for quite some time.

Posted by: Roger

Yes Johnnie the Baht is weak and IMHO, likely to weaken still further in coming months.Chinese moves devaluing the Yuan may motivate Thailand to follow suit. Continuing unresolved problems inside the Eurozone are relevant. Interest rates may increase sooner rather than later in the USA and the UK too.My income arises in the UK so it's good for me. Baht 65 to the £1 would be nice !ATB

Posted by: Johnnie F.

You're right, Roger, the baht is weak and should be even weaker, because it is still too strong, i. e. it is overvalued. Until 6 years ago it was a lot weaker. If it doesn't get corrected soon, i. e. devalued, Thai exports will feel it like the Chinese had to realize that a Yuan too strong isn't good for their economy. We foreign pensioners do feel it the other way round: If the baht is too strong we'll get less baht for our pennies. But expensive exports do find less buyers, and that hurts big money. So politicians got to make the move and devalue.

Posted by: Roger

Johnnie sorry but correct me if I am wrong.The Baht is currently as WEAK as it has been recently.UK Forex shows Baht 55 to £1 yesterday.When the Baht is weak you get or give more Baht for each £/$ etc.When the Baht is strong you get or give less for each £/$ ....6 years ago when I moved to Thailand at Baht 46 to £1 the Baht - the Baht was stronger then ?Confusing ain't it ?ATB

Posted by: Johnnie F.

Looks like it took a considerable dive today, after the Chinese devalued the Yuan for 4.46 5 since yesterday. Hopefully the Thai government follows that move to some degree and devalues the baht as well.

Posted by: thaiga

The baht dropped this month by the most in more than 14 years after the government cut forecasts for growth and exports, spurring outflows from Thai equities as the US prepares to raise interest rates.

The currency fell 4.2% to 35.245 baht a dollar as of 4.15pm, the sharpest monthly loss since March 2001, Bloomberg-compiled data show. It declined 0.5% on Friday and earlier reached 35.280, the lowest level since May 2009.

The economy is slowing as Prime Minister Prayut Chan-o-cha fails to spur a revival and as planned investment in infrastructure falls short of target. While overseas investors sold a net US$856 million of stocks this month as of Wednesday, the most since May 2014, an index of sovereign bonds rose, suggesting demand for the relative safety of debt.

“The baht has fallen in line with a strong dollar,” said Tsutomu Soma, department manager of the fixed-income business unit at Rakuten Securities Inc. in Tokyo. “Thai political uncertainties are also weighing on investor confidence.”

The government is under increasing pressure to overhaul the cabinet and bolster the economy as waning consumer confidence and a slump in manufacturing portend one of the region’s slowest expansions, according to analysts.

The economy may grow 3 in 2015, the Finance Ministry said on Tuesday, down from an April estimate of 3.7%. Exports have contracted for six straight months and a central bank report Friday showed they fell 8.9% last month from a year earlier.

Overseas shipments may drop in 2015 by more than the Bank of Thailand’s 1.5% forecast, senior director Roong Mallikamas said on Friday.

Posted by: thaiga

ECONOMISTS believe the country's status as net creditor and the current account surplus will strengthen the baht after it had hit a six-year low to the US dollar on Thursday, however the global price of gold is expected to continue to drop due to the strengthening of the US dollar.

Usara Wilaipich, senior economist at Standard Chartered Bank, expects the baht that is currently weakening because of overseas factors and the drop in the gold price, to strengthen after the short-term psychological effect dies down due to its strong backup.

"It is like trying to kick a football up the hill; it will eventually roll down since you are kicking it up the slope without anything to provide upward momentum," she said.

Maybank Kim Eng Securities (Thailand) expects the baht to be at 34.5 by the end of the third quarter.

The baht has slid from Bt32.835 to the greenback on April 29 (the day of the second consecutive cut of the policy interest rate this year) to trade at Bt34.936 as of 4pm yesterday. The global gold price has also continued to drop to $1,084 per ounce at the same time yesterday compared with $1,160 per ounce on July 12 (the day that the value of the precious metal started to decline amid the strengthening of the US dollar).

She explained that the reason why the baht had outperformed other currencies before the consecutive cuts in the policy interest rate in March and April was because Thailand was a net creditor: The country's current lending in US dollars is around $190 billion while its foreign debts stand at around $140 billion, which means the Kingdom is a net lender of around US$50 billion.

Somchai Amornthum, executive vice president at Krung Thai Asset Management (KTAM) said the baht was unlikely to slide that much further than Bt35 to the US dollar, as the country's current account surplus is expected to continue to expand. Imports normally increased in July and August every year but oil price has dropped 50 per cent. "Although exports have continued to contract since the beginning of the year, in the overall scenario the surplus in the current account will be even bigger," he said.

"The global oil price is also expected to be in the region of $50 per barrel for quite some time due to the increase in supply and that is another support for surplus in the current account, as Thailand is a net importer of oil," he added.

Thailand currently carries a current account surplus of $2.127 billion as of May 2015.

Kamolthun Pornphaisarnvichit, director of the Gold Research Centre, said the global gold price is expected to drop by about $30 to around $1,050 per ounce during the period of expectation of an expected Fed rate hike around September this year. If the US interest rate is hiked in September, then gold is expected to trade around $1,050-$1,150 per ounce in September and October.

"The gold price in Thailand has dropped less than the global gold price because of the weakening baht. The price in Thailand has dropped by 3.2 per cent to around Bt18,000 per gold bar since the beginning of the month until now while the global gold price has dropped by 4.5 per cent in the same period of time," he said.

Posted by: thaiga

The recent weakening of Thai baht has reduced Thailand’s foreign reserves by US$ 1.5 billion or 52.3 billion baht to US$ 157.3 billion or 5.376 trillion baht against US dollars as of July 17, according to the Bank of Thailand.

The foreign reserves cutback was based on the calculation of the exchange rate of 34.84 baht per dollar. Just one week earlier, foreign reserves stood at US$158.8 billion or 5.39 trillion baht.

Forward position was kept at US$ 19.5 billion compared to last week’s US$19.3 billion resulting to the reduction of net foreign reserves to US$176.8 billion.

Financial market analysts of commercial banks attributed the drop in foreign reserves to steady weakening of the baht against US dollars. They predicted that the baht would continue to weaken but it should not be a matter of serious concern because Thailand’s foreign reserves are at high level and are sufficient to maintain economic stability.

Posted by: thaiga

The continued strength of the US dollar and the weak gold price have led to the baht depreciating to a six-year low, trading at Bt34.84 to the greenback yesterday.Chantavarn Sucharitakul, the Bank of Thailand's assistant governor for Financial Markets Operations Group, admitted that the baht is dropping "quite fast", losing about 2 per cent against the dollar this week.

This is faster than the depreciation of other currencies in the region, which have depreciated 0.3-1.5 per cent.

"The external factor is driven by market speculation that the US Federal Reserve will hike its policy interest rate within this year based on the Fed's comments and recent positive US economic data while the price of gold has dropped below US$1,100 per ounce, which has led to increased demand for the precious metal and demand for the US dollar as well," she explained.

In addition, there are concerns that Thailand's economic performance could be hit by the ongoing drought and the delay in the government's investment projects.

Such an outlook has prompted analysts to lower the country's gross domestic product forecast for this year, with second-half growth to be less than the first half.

Chantavarn said the BOT has not seen any irregularity in the forex markets with relation to the baht.

"The weakening of the baht is needed to support the economic recovery but too rapid a deprecation would make it difficult for the private sector to adapt so the BOT is keeping a close watch," she said.

According to Kasikornbank, the baht is projected to drop below Bt35 to the dollar in the fourth quarter of this year, trading within the target of Bt35.25.

Vallop Vitanakorn, vice chairman of the Thai National Shippers Council, said the weakening baht has benefited the export sector, but importers will be negatively affected, especially those importing consumer and luxury goods.

Kasikornbank said in a report that Thai authorities had acknowledged that the use of the exchange rate during this time is more effective than cutting interest rates to buoy the flagging economy.

Vallop said imported raw materials, which will be re-exported, would not be affected significantly as it can be offset by foreign exchange income.

However, imports of machinery or capital goods may also be delayed to avoid a higher cost due to the baht's weakness, but long-term projects should not be affected.

Commerce Minister Chatchai Sarikulya said the baht's weakness should boost export growth in the second half of the year after facing a contraction in the first six months with June shipments estimated to be down 6-7 per cent year on year.

Exports in the first half of the year dropped about 5 per cent compared to the same period last year.

Charl Kengchon, managing director of Kasikorn Research Centre, said the US dollar has been supported by recent positive economic numbers, which had led to the deprecation of currencies in the Southeast Asia region, including the Thai baht.

"The market expects the US Federal Reserve to hike the US interest rate in September, which has led to the strengthening of the US dollar and the depreciation of the baht, which is a common factor for the region, while the drop in the price of gold has led people to buy gold. This has led to the baht depreciating even further since gold deals would require US dollars as the currency for transaction," he said.

"The capital outflow from Thailand's stock markets is also contributing to the weakening of the baht," he added.

While the baht dropped to a six-year low yesterday, gold prices are now at a five-year low, trading at $1091 on July 22.

The Stock Exchange of Thailand Index has dropped by 3.33 per cent from the beginning of the year, with capital outflow of Bt35.82 billion to date, including about Bt20 billion this month.

Tim Leelahaphan, Maybank Kim Eng Securities (Thailand) economist and assistant vice president of its Research Department said the firm still expects the baht to be around Bt34.50 per US dollar by the end of the third quarter.

"Short-term factors from foreign speculation and the strengthening of the US dollar might push the baht to go beyond Bt35 per dollar," he added.

Prinn Panitchpakdi, country head at CLSA Securities (Thailand), said the baht might go past Bt35 per US dollar as cash is flowing back to the US.

"CLSA expect the baht to be at Bt35-Bt35.5 by the end of the year but it can swing between Bt33.8-Bt35.5 in the next 5-6 months from the US rate hike and the expected improvement of Thailand's economy next year," he said.

Posted by: thaiga

The baht is poised to breaking the 35 level against the US dollar for the first time since 2009, after weakening by 2% this week.

Chantavarn Sucharitakul, assistant governor for financial markets operations, said the local currency had depreciated quickly this week due to both internal and external factors.

The US Federal Reserve will likely increase the policy interest rate this year since the economy is recovering steadily.

Gold prices, which plummeted below US$1,1oo an ounce, have triggered higher demand for the precious metal and the US dollar.

At home, worries about the economy and impacts from the drought, as well as public investment delays, have led to downward revisions of economic forecasts in the latter half of this year.

"Investors have sold some Thai assets as a result, while importers slightly accelerated their purchases. In any case, the Bank of Thailand has yet to find any signs of speculation.

"Although a weak baht is necessary to support economic recovery, too fast depreciation might create volatilities and hamper adjustments by the real sector. We're monitoring the situation closely," she said.

Since the beginning of the year, the baht weakness is in line with regional currencies. It traded at 34.5366/9336 at 8pm on Thursday.

In Asia, Bloomberg reported South Korea's won led losses as a report showed the economy expanded 2.2% in the three months through June, missing estimates and decelerating for a fifth straight quarter.

Asian exports are already contracting as growth falters in China, the top destination for many of the region's manufactured goods. Global funds have cut their equity holdings in six of eight Asian markets tracked by Bloomberg in July.

"There's a shift in investor interest from Asia to places like Europe due to growth considerations and expectations for higher yields," said Saktiandi Supaat, head of foreign-exchange research at Malayan Banking Bhd. in Singapore. "Growth fundamentals seem a bit weak for Asia."

South Korea's won fell as much as 1.1% to a three-year low against the dollar, followed by a 0.4% loss in Malaysia's ringgit. The baht dropped 0.2 percent. Indonesia's rupiah declined to the weakest since the Asian financial crisis that roiled markets in 1997-98.

Falling commodity prices are also weighing on raw-material exporters such as Malaysia, whose currency is Asia's worst performer this year amid a slump in Brent crude. The Bloomberg Commodity Index slid Wednesday to the lowest close since 2002, dragged down by a plunge in gold.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region's 10 major currencies, was little changed after earlier falling as much as 0.2% to a five-year low.

Growth in China, the region's largest economy, is projected to slow to 7% this year, the least since 1990. Overseas investors sold a combined net $2.5 billion of shares in South Korea and Taiwan this month, both of whom count China as their biggest export markets.

Elsewhere on Thursday, India's rupee dropped 0.2% and the Philippine peso fell 0.3%. Taiwan's dollar depreciated 0.3%, while the yuan and Vietnam's dong were both little changed at 6.2095 and 21,818, respectively.

Posted by: thaiga

The baht plunged to its weakest level since September 2009 amid sustained outflows from local assets and a selloff in Chinese equities.

Global funds have withdrawn a net US$199 million from stocks and bonds this month, taking total outflows for 2015 to $1.2 billion, data compiled by Bloomberg show.

The benchmark SET Index of local shares fell 0.5% on Wednesday after dropping to an almost seven-month low Monday as investors grapple with potential risks stemming from Greece's likely exit from the euro and a stock rout in China.

The baht declined for a third day, retreating 0.2% to 34.007 a dollar as of 11:49am in Bangkok, according to data compiled by Bloomberg. The currency, which has lost 4.3% in the past three months in Asia's second-worst performance, sank as low as 34.055 earlier. A gauge of dollar strength rose for a fourth day.

"Foreign outflows signal a weaker outlook for the baht," said Thanomsri Fongarunrung, an economist at Phatra Securities in Bangkok. "The ongoing anxiety in China's stock market and its economy has further weakened sentiment for the baht and other currencies in the region."

China, Asia's largest economy, is the second-biggest export market for Thailand after the US, accounting for about 11% of total overseas shipments in the January-May period, according to a commerce ministry statement dated June 26.

Sovereign bonds climbed, pushing the 10-year yield down four basis points to 2.89%, on course for its lowest close since June 3, according to data compiled by Bloomberg.

Posted by: thaiga

Thai baht weakened to 33.85-86 against US dollar at the open Monday, as most emerging Asian currencies led by the Malaysian ringgit lost ground."Failures to reach the bailout package that lead to bank closure weaken the euro against the greenback," said a currency trader in Bangkok. He expected the Thai baht to move in the range of 33.75-95 today.

Some economists foresee the $/34 rate soon. The level was last seen in 2009.

The ringgit today traded at a 10-year low as Greece looked to be heading for a default on its debt, causing investors to head for safer assets. The ringgit came under additional pressure due to concern that Fitch Ratings may downgrade Malaysia’s credit rating due to the debt problems of state fund 1MDB.

South Korea’s won slid to a 3-1/2-month low, while the Indonesian rupiah fell to around a 17-year trough.

Emerging Asian currencies are likely to stay under pressuredue to a strong US dollar and growing risk aversion, with the prospect of Greece being forced out of the euro, analysts said.

The ringgit lost 0.4 per cent to 3.7830 per dollar, its weakest since July 2005. Malaysian companies bought the dollar for month-end payments, hurting the local currency further. The Malaysian unit’s downside was limited by caution over possible intervention by the central bank to support the worst-performing Asian currency so far this year.

The Korean won fell nearly 1 per cent at one stage to 1,127.9 perdollar, its weakest since March 18. The South Korean currency pared some of its losses as exporters chased it for month-end settlements, and that caused some traders to cover short positions in the won.

Posted by: thaiga

The baht strengthened slightly after the US Federal Reserve decided to maintain its policy interest rate.The Thai currency gained by 0.9 per cent yesterday, to 33.59 against the US dollar, after closing at 33.62 on Wednesday.

"The US dollar depreciated after the Fed's meeting, which has contributed to the slight appreciation of the baht, but the movement is normal and is in line with other currencies in the region," said Bank of Thailand spokesman Chirathep Senivongs Na Ayudhya.

Kasikorn Research managing director Charl Kengchon said Thailand would briefly escape the pressure from potential capital outflows. The baht movement would mainly be influenced by US economic indicators, he added.

Federal Reserve chairwoman Janet Yellen on Wednesday said the interest-rate decision was still up in the air and that she wanted "more decisive evidence" that the US labour market was healing, and that wages would increase beyond their current "subdued pace".

While an increase in the Fed funds rate from the current level of 0-0.25 per cent is anticipated in September, the Fed lowered its 2015 economic growth forecast for the US economy to 1.8-2.0 per cent versus the range of 2.3-2.7 per cent that was projected earlier.

Tim Leelahaphan, Maybank Kim Eng Securities (Thailand) economist, said the comments Yellen made after the Federal Open Market Committee (FOMC) meeting were "less hawkish than expected" but the securities firm maintains that the Fed rate increase will lift off in September at the earliest.

"The FOMC has revised down the US economic projection and it has revised down the path of the rate increase, while Yellen has also commented that its decision on the interest rate would be data-dependent, so the overall comments seem to be toned down," he said.

Maybank expects a 50-basis-points increase in 2015 and 100 basis points in 2016, and the momentum of the increase will be in a "go-stop-go" motion. The US policy interest rate has been in the range of 0-0.25 per cent since 2008.

Izumi Devalier, an economist at HSBC, said the important thing regarding the Fed rate increase was how quick it would be and where it ended up, and there was still a lot of uncertainty there.

Rate hike expected in Dec

"We expected the Fed to raise the interest rate in December, but in a very gradual manner, and that should be good for Asia's economy, as a very gradual rate normalisation in the United States means that there will be less volatility in Asia," she said.

HSBC expects an increase of 25 basis points this year and 50 basis points next year.

One risk that people should be keeping an eye on is a "very sharp and abrupt steepening" of the US long-term bond yield curve as the yield curve is quite flat. The short-term interest rate is zero and the 10-year yield is fluctuating at 2-2.5 per cent, but there are signs that the curve has steepened a bit and it could move up quite sharply in the future from a variety of factors, Devalier said.

"If the negative term premium becomes positive and if that happens in a very aggressive manner, it would be very disruptive for many Asian economies that have current-account deficits and high-level foreign ownership in portfolio debt, such as Malaysia and Indonesia," she said.

Thailand is not one of the countries at risk at the moment as foreign ownership in Thai government bonds is only at 11 per cent and the Kingdom is expected to have a current-account surplus of around US$12 billion this year, she concluded.

Posted by: thaiga

The downward trend of the Thai baht continues on the back of US dollar rally.

As of 2.25pm, the baht was at 33.74 per dollar, from yesterday close of 33.64. It recently fell to the six-year low at 33.78-79. The greenback has also strengthened against other major currencies as well as the currencies in Asean.

Yesterday, the dollar was above 13,000 Indonesian rupiah, the level unseen since 1998.

The baht has fallen sharply since the Bank of Thailand cut the policy rates while the central bank governor signalled the bias towards a weaker curreny, to revive the domestic economy.

Many currency strategists predicted the dollar upswing would start next month on expectations that Fed Chair Janet Yellen will set the stage for a hike in the third quarter at the upcoming policy meeting.

The Fed has said that a rate rise, which most economists expect will come in September, will be dependent on improving economic data. Friday’s employment report could provide a spark if new jobs created in May exceed the 225,000 market consensus.

"The onus on economic data to surprise sharply to the upside over the next few weeks is fairly high, else the Fed may be unable to prepare the market at the June FOMC for hikes commencing in the third quarter," analysts at Barclays wrote in a note.

The US currency is up more than 20 per cent since last summer.

What could have a big impact is a resolution to the stand-off between Greece and the European Central Bank, the European Commission and the International Monetary Fund. Currency speculators have been long dollars and short euros in recent days as worries over a potential Greece default have risen.

In the latest Reuters poll, forecasters have moderately upgraded their expectations of the euro, although they expect the common-currency to trade lower in the coming twelve months.

The euro is expected to fall to $1.05 in six months and further to $1.04 in a year.

But the number of analysts who forecast the euro to trade at or below parity against the dollar has fallen - from 22 in April, 19 in May to 15 in the current poll.

The poll also showed strategists were confident that sterling will be less vulnerable to a dollar rally.

Although the consensus that the pound will weaken to $1.50 in six months and $1.51 in a year, from $1.53 currently, this represents a significantly stronger set of forecasts when compared with the May poll.

After the centre-right Conservative party unexpectedly won an overall majority in May’s election, easing political uncertainty, a majority of the common contributors raised their forecasts for the pound from last month’s poll.

Posted by: thaiga

THE BAHT will continue to be volatile, the Bank of Thailand has warned, suggesting that business operators keep guarding against foreign-exchange risks.Meanwhile markets are keeping an eye on the monetary policies of major economies and the baht's depreciation will help reduce Thailand's competitive disadvantages, the central bank said.

Vachira Arromdee, senior director of the Financial Markets Department at the BOT, said the Thai currency would tend to con-tinue its volatility in the next periods, given internal and external factors.

Markets are still watching for |the United States' likely interest-|rate increase, and monetary stimulus in Japan and the European Union.

Markets are still concerned over China's economic slowdown as that could affect exports, which have contracted in Asia since the beginning of the year.

Given uncertainties over the global economic recovery and its fragility, there remains possibility for two-way directions and business operators should shield themselves against foreign-exchange risks, Vachira said.

Since the beginning of the year, the baht had been appreciating against the currencies of Thailand's trading partners and competitors partly because of drops in global oil prices. In March, however, the Thai currency started moving with volatility in two directions, following the country's economic and monetary-policy movements, US moves and economic situations across the globe.

Vachira noted that most US |economic figures had been weak of late, prompting the US dollar's depreciation against regional currencies in this region, including the baht.

This month, the baht has moved in a range of 33.18-33.88 per US dollar, and since the beginning of the year, it has depreciated by about 2 per cent. Given such rapid changes, the baht's volatility rate rose from 3-4 per cent to 6-7 per cent. However, that is still lower than the currency volatility seen in other countries in the region.

Posted by: thaiga

The baht, Asia’s worst-performing currency of the past month, sank to its weakest level since September 2009 as global funds reduced holdings of the nation’s bonds.

The baht fell 0.2% to 33.759 a dollar as of 9.43am in Bangkok, data compiled by Bloomberg show. The currency has lost 3.6% in the past month. A gauge of dollar strength climbed 0.4% on Monday as investors bet the Federal Reserve remains on track to raise interest rates this year while global peers retain unprecedented easing.

Posted by: thaiga

Thailand's baht has long out-muscled regional peers, but amid a stumbling economy, the central bank has pulled the plug on supporting the currency.

The Bank of Thailand (BOT) last week sent a triple whammy to the markets: In a surprise move, it cut its benchmark interest rate by 25 basis-points to 1.5 percent. In its statement, the BOT mentioned its concerns about the continued strength of the baht. That was followed up with the easing of some of the country's capital controls, which will allow more funds to flow out of the country.

Posted by: thaiga

The baht dropped, capping its biggest weekly loss since 2013, as the Bank of Thailand eased curbs on fund outflows a day after unexpectedly cutting interest rates.

The central bank will raise limits on foreign-currency deposits at domestic banks and on overseas property investments, assistant governor Chantavarn Sucharitakul told a briefing on Thursday. It will also allow local investors to invest directly overseas and non-residents will be able to borrow more baht from local banks, he said.

“The central bank’s new currency measures and interest-rate reduction will accelerate the baht’s weakness faster than the market had expected,” Pimonwan Mahujchariyawong, an economist at Kasikorn Research, said by phone. “The strong currency makes it harder for exporters.”

Posted by: thaiga

BANGKOK, 23 April 2015, (NNT) - The Bank of Thailand (BOT) has admitted that the Thai baht has recently appreciated, due to under-performing economic figures in the United States causing the dollar to depreciate.

BOT Governor Prasarn Trairatvorakul stated that Asian currencies are also experiencing depreciation due to country-specific factors. He said these elements will be further explored during a meeting between the BOT and the Monetary Policy Committee on April 29.

However, he said that he believed Thailand’s economy in the second and third quarters would improve from the first quarter.

The National Economic and Social Development Board of Thailand (NESDB) has forecast three percent growth in the first quarter of 2015. Mr. Prasarn has pointed out that the NESDB’s projection has two implications.

The governor explained that if the figure is compared to the same period last year, then it is considered high growth. However, if the figure is compared to the previous quarter, then growth is minimal.

Posted by: thaiga

Thailand’s 2023 government bonds fell for a third day after the central bank kept interest rates unchanged amid a selloff in emerging-market assets.

Sixteen of 23 economists surveyed by Bloomberg predicted the Bank of Thailand would keep its benchmark rate at 2 percent today, while seven forecast a 25-basis-point cut. Overseas investors have pulled $608 million from Thai stocks this month as crude oil’s slide to a five-year low and a plunge in the Russian ruble to a record deterred risk-taking.

The yield on government bonds due June 2023 climbed four basis points, or 0.04 percentage point, to 2.80 percent, according to data compiled by Bloomberg. That took this week’s increase to 10 basis points. The Stock Exchange of Thailand Index (SET) of shares rose 1.2 percent, halting a six-day drop. The baht was steady at 32.95 per dollar.

“The central bank continues to highlight the slow pace of the recovery and appears willing to cut rates in the coming quarters if growth remains weak,” Barclays Plc analysts including Rahul Bajoria wrote in a research note. “We believe the balance of risks is towards the BoT providing further monetary accommodation in the first quarter, although this would be contingent on global financial stability.”

The baht has fallen 1.6 percent this quarter, declining along with 22 of the 24 emerging-market currencies tracked by Bloomberg. The Federal Reserve may signal U.S. rate increases for 2015 after a policy meeting that ends today.

The Bank of Thailand has no plan to impose measures to limit fund outflows, Governor Prasarn Trairatvorakul told reporters in Bangkok yesterday. No unusual capital outflows have been detected and the baht has moved in line with regional currencies, he said.

Posted by: thaiga

The Bank of Thailand says the weakening of the baht is in line with the depreciations of other currencies in the region caused by market speculation that the US Federal Reserve will be able to increase its policy interest rate faster than expected.The latest market consensus is that the United States will increase its policy rate in the third quarter of 2015.

The US announcement on Friday of a better-than-expected increase in the non-farm payroll in November has led to a strengthening of the dollar, BOT Assistant Governor Chantavarn Sucharitakul said. The payroll increased by 321,000 positions, against expectations of only 230,000.

Chantavarn said the baht was currently in the middle of the park when compared with other currencies in the region.

Asset outflows remain normal, with foreigners still net-sellers in the capital market. In the first 11 months of the year, they net-sold around US$1 billion. Currently foreigners hold 10 per cent of Thai government bonds, she said.

According to the Bloomberg website, the baht was at 33.074 per US dollar as of 5.45pm yesterday.

Supavud Saicheua, director of Phatra Capital, said the baht could reach 34 next year on the strengthening of the dollar.

Consumer prices rose 1.48% last month from a year earlier, the slowest pace in a year, the Commerce Ministry reported on Monday. That compares with the median estimate of 1.6% in a Bloomberg survey. The Finance Ministry cut its 2014 economic growth forecast last week to 1.2-1.7% from a previous estimate of 2%.

“Yesterday’s inflation data continue to show a weaker economic backdrop,” said Jonathan Cavenagh, a Singapore-based strategist at Westpac Banking Corp. “There’s still a question of how strong growth is going to be in Thailand.”

Five-year bonds advanced for a third day.

The yield on government notes due June 2019 slipped one basis point, or 0.01 percentage point, to 2.59%, according to data compiled by Bloomberg.

Posted by: thaiga

BANGKOK, Oct 4 -- The Thai baht is projected to remain weakened during next week after it slipped to 32.50 baht per US dollar on Friday, its weakest position in the past three months, according to a report issued by Kasikorn Research Centre.

The Centre has projected that the Thai baht is expected to move between 32.35 – 32.65 baht per dollar next week as traders cautiously watch dollar movements early in the week while they take into account the latest U.S. employment data.

A report issued by the US Labor Department on Friday said US jobless rate declined to a six-year low of 5.9 per cent in September and that employers hired more workers than projected.

The unemployment rate fell to the lowest level since July 2008, down from 6.1 per cent.

Traders are also closely monitoring the US Federal Reserve and the number of unemployed applying for weekly welfare so that they could assess the direction of US interest rate, according to the Centre report.

The baht remained weak throughout this week due to buying of US dollar before the end of the third quarter and on concerns over the ongoing unrest situation in Hong Kong which has already depressed Asian currencies, it said.

Also, the baht was weak in line with net selling in the bond market and Thai equities by foreign investors while the greenback strengthened late in the week as investors adjusted their positions, the Centre added.

Posted by: thaiga

The baht gained for a second day before the Bank of Thailand’s interest-rate meeting as speculation the US Federal Reserve will keep rates low for an extended period boosted demand for emerging-market assets.

The Thai central bank will hold borrowing costs at 2% today, according to all 21 economists surveyed by Bloomberg on Wednesday ahead of the decision at 2.30pm.

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, fell the most since June yesterday as the Fed started its two-day policy meeting.

“The baht is more stable along with other regional currencies as concern about an increase in US interest rates eases,” said Thammarat Kittisiripat, an analyst at TMB Bank Plc. “The central bank will maintain the benchmark interest rate at this low level for the rest of this year as the domestic economy still has a very slow recovery.”

The baht rose 0.1% to 32.214 per dollar as of 9.45am in Bangkok after earlier climbing as much as 0.2% to 32.184, data compiled by Bloomberg show. The currency advanced 0.1% on Tuesday, halting a six-day run of losses.

One-month implied volatility, a measure of expected exchange-rate swings used to price options, was little changed at 4.96%, data compiled by Bloomberg show. The gauge has climbed 15 basis points this week.

Overseas investors bought a net US$37.7 million of the nation’s debt and equities on Tuesday, according to data from the stock exchange and Thai Bond Market Association.

Bond Market

The economy will improve next quarter and the government will focus on boosting exports and increasing the value of products, Prime Minister Prayuth Chan-Ocha, who is also the junta leader, said Tuesday after a weekly Cabinet meeting. The appointed National Legislative Assembly also passed a budget bill calling for 2.575 trillion baht ($80 billion) in total spending for the fiscal year starting Oct. 1.

Government bonds of two, five and 10 years were little changed before the rate decision. The yield on the 5.4% notes due in July 2016 was at 2.48%, data compiled by Bloomberg show. The yield fell seven basis points, or 0.07 percentage point, in the past three weeks. It reached 2.46% on Sept 12, the lowest level since June 20.

Posted by: thaiga

The Thai baht rose for a third month and bonds gained as the military-led government stoked an economic recovery, spurring inflows to the nation’s stocks.

The currency appreciated 0.5% in August to 31.95 per dollar as of 10:17am in Bangkok, taking its three-month advance to 2.7%, the best among 24 emerging-market exchange rates tracked by Bloomberg. Thailand attracted a net $76 million into equities during the month, adding to July's $427 million, stock exchange data show.

National Council for Peace and Order leader Prayuth Chan-Ocha has boosted state spending and restored political stability since a May 22 coup. Gross domestic product increased 0.4% in the second quarter from a year earlier, after contracting 0.5% in the previous three months. While the baht has rallied, gains may be subdued ahead of current-account data today that's forecast to show the surplus more than halved in July.

"As the military junta is making progress in revitalizing the economy after disruptions in the first quarter, we've seen a return of portfolio inflows, helping the baht recover some of the earlier losses," Jessica Liang, a Hong Kong-based analyst at Morgan Stanley Asia Ltd, wrote in a research note Thursday. "However, we remain cautious on the baht given its weak current-account cushion and uncertain political outlook."

Trade Data

The Bank of Thailand was expected to report today that the current-account surplus narrowed to $620 million in July from $1.84 billion in the previous month, according to the median estimate in a Bloomberg survey. The baht was little changed today and for the week.

Southeast Asia's second-biggest economy may expand 5% in the next four quarters, central bank governor Prasarn Trairatvorakul said on Aug 27. Credit Suisse Group AG raised its 2015 growth estimate to 4.5% from 3.9%, Santitarn Sathirathai, a Singapore-based economist, wrote in a research note yesterday.

Overseas investors bought a net $181 million of the nation's debt this week through yesterday, according to Thai Bond Market Association data. The yield on the 3.625% government notes due in June 2023 fell 11 basis points, or 0.11 percentage point, to 3.46% in August, data compiled by Bloomberg shows. That adds to the 17 basis point drop in the past two months. It declined two basis points today.

One-month implied volatility in the baht, a measure of expected exchange-rate swings used to price options, rose three basis points today and 14% basis points this month to 4.45%, according to data compiled by Bloomberg.

Posted by: thaiga

The Thai baht posted its biggest two-month gain since October as overseas investors increased purchases of the nation’s assets on optimism the military government will revive economic growth.

The junta, which took control in a May 22 coup, approved an infrastructure investment plan on Tuesday that will include the construction of new railways, mass transit systems in Bangkok and nationwide highways. The economy, which shrank in the first quarter, may expand 5% in 2015 from about 2% this year on higher spending and a rebound in exports and tourism, the Finance Ministry said on Wednesday.

The currency appreciated 1% in July to 32.128 per dollar as of 4.30pm, adding to June’s 1.2% gain, according to data compiled by Bloomberg. It reached an eight-month high of 31.74 on July 23. Global funds bought a net $5.05 billion of local debt this month through Wednesday, the biggest inflow since February 2012, Thai Bond Market Association data show.

“There is room for more foreign fund inflows because Thailand’s economic outlook has turned more upbeat,” said Pongtharin Sapayanon, a fixed-income fund manager at Aberdeen Asset Management. “Foreigners have raised their positions in Thai financial assets after selling them off during the political deadlock.”

The SET Index of Thai shares rose 1.1% in July for a sixth straight month of gains as overseas investors pumped a net $460 million into the nation’s equities through July 30, halting two months of outflows. It dropped 1% on Thursday.

In the local bond market, 10-year notes posted the first monthly gain in three. The yield on sovereign debt due in April 2024 fell 19 basis points, or 0.19 percentage point, to 3.74%, according to data compiled by Bloomberg. It reached a two-month low of 3.68% on July 22.

"ING Groep NV predicts the yield will drop to 3.4% by year-end," Singapore-based economist Prakash Sakpal wrote in a research note on Wednesday.

Posted by: thaiga

Thailand’s baht was headed for a fifth weekly gain, its longest winning streak in more than a year, as overseas investors pumped US$2 billion into the local bond market in the last four days.

The currency strengthened 0.8% from a week ago to 31.876 per dollar as of 9.39am in Bangkok, data compiled by Bloomberg show. It declined 0.1% today. Global investors have been net buyers of Thai debt on each of the last 20 days, boosting their holdings by $5.3 billion in that time, according to figures from the Thai Bond Market Association. They also pumped $700 million into Thai equities during the period.

“Large money inflows in the domestic bond market have accelerated the baht’s strengthening,” Kampon Adireksombat, an economist at Tisco Securities Co. in Bangkok, said by phone. “Most investors are very optimistic about the Thai economic outlook from the government’s investment policies.”

Thailand’s economy, which shrank in the first quarter, can return to growth rates of between 5% and 6% as the military government’s policies help “jump-start” expansion, Pridiyathorn Devakula, a former finance minister and an adviser to junta leader Prayuth Chan-Ocha, said on July 21. On July 15, the National Council for Peace and Order, a group of military leaders, approved a budget starting Oct 1 with a 2% increase in investment in infrastructure projects.

The yield on sovereign bonds due April 2024 fell six basis points, or 0.06 percentage point, this week to 3.77%, according to data compiled by Bloomberg. It dropped to a two- month low of 3.68% on July 22.

Reversal Signal

The baht may retreat to between 32.50 and 33 per dollar by the end of this year as the pickup in domestic demand is likely to fall short of market expectations, Tisco’s Kampon said. The baht’s 14-day relative strength index was 29, holding for a fifth day below the 30 level that suggests to some traders that the currency is poised to weaken.

Thailand’s military leaders on July 22 delayed a decision on the transport ministry’s infrastructure investment plan to next week. The government said last month it plans to spend 2.4 trillion baht ($75 billion) to build and expand networks such as highways, railways and airports between 2015 and 2022.

Posted by: thaiga

BANGKOK, 15 July 2014 (NNT) – The Bank of Thailand (BOT) has revealed that the Thai baht gained 1.3 percent during the first half of this year, while the outflow by foreign investors was valued at about US 3 billion dollars.

Chantawan Sucharitkul, BOT Assistant Governor, noted that Thai baht moved in line with other regional currencies and the global economy during the first half of this year. At the beginning of the year, the Thai baht was weaker due to the political crisis before becoming stronger in February. Later the Thai baht became weaker again in May. Then, from May 22 onwards, after the military took power, the baht has been strong due to the more stable political situation.

Besides, the flow of foreign investors’ funds returned in June. The Thai bourse has gained 14.4 percent since the end of last year. Foreign investors sold 41 billion baht in the Thai stock market. Foreign investors sold 42 billion baht in the bond market, and now holds bonds accounting for 9.7 %, a 10.34 % decline since the end of the previous year. In addition, yields of government bonds decreased 17-34 bps due to the economic slowdown.

Meanwhile, from the BOT’s point of view, the Thai baht is moving in an acceptable range, not fluctuating too much. Economic recovery and progress in forming a government will be positive for the Thai baht. As for moves to make the Yuan a major global currency, the BOT considers that it will be beneficial for Thai entrepreneurs engaged in border trade with China. As well, BOT diversifies its reserves in various currencies. So, it should not affect the Thai baht.

Posted by: thaiga

KUALA LUMPUR — The baht was the best-performing Asian currency this week as Thailand’s junta pledged to boost spending to revive economic growth. Indonesia’s rupiah led losses after the country reported a surprise trade deficit.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, was steady for the week, erasing a decline after the European Central Bank cut interest rates to negative on Thursday, potentially spurring fund flows to emerging-market assets. Thailand’s military administration, which took over in a May 22 coup, promised to step up infrastructure development and increase investment in areas adjacent to the nation’s borders.

“The perception is that the new Thailand government has provided stability and improved conditions for growth,” said Dariusz Kowalczyk, a Hong Kong-based strategist at Credit Agricole CIB. The ECB’s stimulus programme is “positive for high-yielding currencies such as those in Asia,” he said.

The baht appreciated 0.9% this week, the most since February, to 32.560 per dollar as of 3.36pm in Bangkok on Friday, according to data compiled by Bloomberg. The Philippine peso rose 0.2% to 43.65, while the rupiah fell 1.3% to 11,834 and Malaysia’s ringgit declined 0.1% to 3.2150.

Foreign funds pumped $523 million baht into Thai stocks and local-currency sovereign bonds in the first four days of the week, exchange data show. The junta plans to speed up investment in a dual-track train project and promote economic development zones near borders with Malaysia, Myanmar and Laos, ACM Prajin Juntong, the head of economic affairs, told reporters in Bangkok on June 1.Stocks rally

The ECB became the first major monetary authority to use negative deposit rates to spur consumption, and said it would offer liquidity to lenders to boost credit growth. The euro rose against the greenback after the announcement and the MSCI Asia Pacific Index of shares headed for its highest close since October on Friday.

Inflation in the Philippines accelerated to 4.5% in May, the fastest since 2011 and exceeding the median forecast of economists surveyed by Bloomberg for a rate of 4.2%, data showed on Thursday. That spurred speculation the central bank will raise borrowing costs at its June 19 meeting.

The rupiah had a third weekly drop after Indonesian authorities reported a $1.96-billion trade deficit in April, the biggest shortfall in nine months. The current-account gap may almost double this quarter from the previous period, central bank Governor Agus Martowardojo said in Jakarta yesterday.‘Rupiah weakness’

“Our view is for more rupiah weakness against the dollar,’ said Mika Martumpal, treasury research and strategy head at PT Bank CIMB Niaga in Jakarta. ‘‘We still see current-account deficit narrowing from 2013, but the second quarter will prove to be a challenging time.’’

Elsewhere in Asia, India’s rupee slipped 0.1% this week to 59.185 per dollar and China’s yuan declined 0.05% to 6.2502. Taiwan’s dollar retreated 0.1% to T$30.08, while South Korea’s won was little changed at 1,020.45 through Thursday, with financial markets in the country closed on Friday for a public holiday. The Vietnamese dong dropped 0.1% to 21,185.

Posted by: thaiga

The baht has remained stable despite weakening a little compared with last week on external factors, the Bank of Thailand says.BOT spokeswoman Roong Mallikamas said that between Monday and yesterday morning the currency had moved within the range of 32.56-32.73 per US dollar. Its average value is lower than last week as the US economy and its currency have strengthened.

"Many of the US economic indicators are better than expected, such as the amount of durable goods ordered and the relaxed monetary policy of the European Central Bank, which contributed to the strengthening of the US dollar. Therefore, the baht and other currencies in this region have slightly weakened when compared with the US dollar," she said.

The baht closed yesterday at 32.97 per dollar. Roong said internal factors had no effect on the currency, bond or stock markets even though foreign investors had continued to be net sellers of bonds and stocks, the amounts were not as critical as in the first day after the coup. At that time, some panicked investors sold most of their Thai assets to reduce risks.

"Most foreign investors are still waiting to see the developments of political reform and the economic stimulation process," she said.

As for domestic investors, Roong said their confidence level was still sound and they were net buyers in the stock market, which would help bring the SET Index back to the same level as before the coup.

The Stock Exchange of Thailand closed yesterday at 1,408.51, up 5.72 points from Wednesday.

Five-year credit default swaps protecting Thai government debt against non-payment fell from 133 basis points on May 22 to 122 on Wednesday, the same level as in mid-May. Roong said the drop showed that political factors had only a short-term effect on foreign investors and now they were more relaxed about the situation.

Posted by: thaiga

Thursday 'panic' short-lived, currency bounces back; SET closes down 0.6%Panic in the foreign-currency markets after Thursday's coup causes the baht to depreciate but the effect was short-lived, the Bank of Thailand said.

BOT spokeswoman Roong Mallikamas said there was a mild panic initially that led to a weakening of the baht by 0.23 against the US dollar on Thursday but it soon bounced back.

"Some investors were uncertain about the coup situation at the start, so they had to protect themselves from risks, which is in the nature of investors and understandable, but it caused the baht to depreciate quite rapidly by 0.23. However, it bounced back after a short period of time," she said.

Roong said the currency yesterday morning was moving within the range of 32.48-32.57, which was not much different from its value before the coup. As of 6pm it was 32.64.

The baht was valued at 32.669 per dollar on Wednesday.

The SET Index yesterday dropped 0.60 per cent to close at 1,396.

"If there is a situation that causes the currency's value to change too rapidly, such as a continuous panic situation or if there is a currency movement that is not in line with the basic fundamentals of the economy, the BOT will have the duty to consider stepping in to take care of the stability of the financial market," Roong said.

She said the current stability in the financial market was based on a number of factors, including its ability to absorb political news. Some market players also believe that the coup could be a changing point from the chronic uncertainty of the past several months. "Thailand's financial market is deep and wide enough that there are variety of market players who can create a range of views and not flock in the same direction. Therefore it can be said that the country's financial market is quite stable, but stability does not mean no movement."

Roong said that after the news of the coup came out, government bond yield increased slightly, by 4-5 basis points, but fell almost immediately to where it was before the Army's seizure of power. This showed that investors in the bonds were not panicked by the situation.

As for the movement in the Stock Exchange of Thailand yesterday, Roong said some investors had sold and closed down their status to wait and see how the political situation develops, and the index fell by 20.75 points in the morning.

She said the stock market would probably experience some capital outflow but not much since there was little change in prices.

The SET Index yesterday dropped 8.37 points to close at 1,396.84. SET chairman Sathit Limpongpan said the morning session saw foreign net sales of Bt3.6 billion while individual investors purchased a net Bt4 billion, indicating that the latter had confidence in the market and understood the present political situation.

The SET will work closely with the Association of Thai Securities Companies to provide more information to foreign investors that Thai-listed firms have solid fundamentals, he said.

SET president Charamporn Jotikasthira said the market had experienced several crises over the years, so it had gained strength to weather each new one. He also noted that foreign investors' sales in the two days following the declaration of martial law were worth Bt11 billion, not a huge amount. Foreign investors' sales were worth Bt200 billion last year.

According to Fitch Ratings, the military takeover is not in itself a negative sovereign-ratings trigger. The key factor for Thailand's sovereign credit profile is the speed at which the country can move towards installing an effective, fully functioning government without sparking a further escalation in political instability.

If a process for political stabilisation is not in place by early in the second half of this year, then the rating agency would expect more lasting damage to the economy that could ultimately be negative for Thailand's sovereign credit.

Fitch expects to lower its forecast of 2.5-per-cent growth for 2014 for Thailand on the back of the political uncertainty and weak first-quarter data showing that gross domestic product contracted by 0.6 per cent year on year. The government has already cut its own growth forecast to a range of 1.5-2.5 per cent, from an initial 3-4 per cent.

The economy is reasonably well positioned to rebound quickly from short negative shocks, it said.

Suchart Thanathitiphan, executive director of the Thai Bond Market Association, said the coup could put negative pressure on the stock market rather than the bond market, given the different types of investors in each.

No controls have been put on financial transactions and businesses, and people continue to live their normal lives, he said.

Foreign investors in the Thai bond market are relatively confident with the country's economic fundamentals and the coup should provide more ways out and allow foreign investors to gain confidence, he said.

In the four days following the declaration of the martial law on Tuesday, foreign investors sold Bt600 million worth of Thai bonds on Monday and Bt2 billion on Tuesday before purchasing Bt2 billion on Wednesday and Bt3.5 billion on Thursday.

"Upgrading in response to the coup may have some impact on the bond market, but not much, as it may have on the stock market," Suchart said.

"The situation could slow down purchases or prompt sales in the short term before a buy-back. When everything eases, there's a chance for foreign capital to return."

Posted by: thaiga

BANGKOK, 23 May 2014 (NNT) – Within half an hour of General Prayuth Chan-ocha's announcement of the declaration of the coup on national television yesterday (22 May 2014), the baht fell 0.3 percent against the U.S. dollar, down to 32.56 baht.

However the currency did not break recent lows, suggesting that some investors believe that the military's action could be a force in stabilizing the country.

Earlier this month, the currency hit its lowest point in three months at 32.63 per dollar. The baht, however, has still strengthened by 0.4 percent against the dollar this year.

Posted by: thaiga

as the army imposed martial law nationwide after months of political turmoil that hurt the economy and led to Yingluck Shinawatra being ousted as prime minister.

The baht weakened as much as 0.6%, the biggest intra-day loss since March 20, before trading 0.3% lower on the day at 32.56 per dollar as of 8.45am in Bangkok, according to data compiled by Bloomberg. Five-year credit- default swaps protecting the nation’s debt against non-payment climbed to a one-month high of 127 basis points yesterday in New York, CMA prices show.

Martial law has been introduced to restore order and this is not a coup, Army Chief Prayuth Chan-Ocha said on local television, asking political groups to end protests that began in November and have led to violence that claimed 28 lives. Today’s move comes a day after government data showed gross domestic product unexpectedly shrank in the first quarter as demonstrations hurt production and tourism.

“Some foreign investors will dislike the martial law because it shows the situation is out of hand,” Prapas Tonpibulsak, chief investment officer at Krungsri Asset Management Co, which oversees about $7 billion in assets, said by phone. “The military’s intervention may force politicians to be more willing to go to the negotiating table now.”

The introduction of martial law is the army’s most direct involvement in the Southeast Asian nation’s politics since 2006, when then-premier Thaksin Shinawatra was removed in a coup. Thailand has been without a fully functioning government since December, when then-premier Yingluck Shinawatra, Thaksin’s sister, called snap elections in a bid to ease the unrest.

Elections derailed

A February poll was disrupted by anti-government protest leader Suthep Thaugsuban’s followers and the government and election officials were unable to schedule a new one before Yingluck was removed on May 7 after a court ruled she abused her power in office. Mr Suthep’s protesters have derailed plans for a July 20 election and the army had said previously it may use force to counter any escalation of violence.

Thailand’s “political crisis has dragged on for longer than expectations and relative to historical standards,” Alan Richardson, whose Samsung Asean Equity Fund beat 96% of peers tracked by Bloomberg in the past five years, said in a phone interview from Hong Kong. “We can see that the political crisis has affected economic and corporate fundamentals since the start of this year.”

GDP fell 0.6% in the first three months of 2014 compared with a year earlier, while the median forecast of economists surveyed by Bloomberg was for a 0.4% increase. The benchmark SET Index of shares may slide to 1,200 and the baht could weaken to 34 in the “short term,” according to Mr Richardson. The index gained 0.4% on Monday to close at 1,410.63, the highest level since May 2.

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The baht had its biggest weekly advance in a month and government bonds rose as foreign funds pumped money into local assets on signs the political situation is stabilising.

Overseas investors have bought a net $604 million of Thai stocks and $1.1 billion of the country’s debt since the end of February as anti-government protesters removed blockades in Bangkok and authorities lifted an emergency decree. The baht has rallied in line with regional peers on the back of dollar weakness, Bank of Thailand spokeswoman Roong Mallikamas said on Friday. The currency fell the most in more than two weeks today as the MSCI Asia Pacific Index of shares slumped.

The baht rose 0.6% this week, the most since the five-day period ended March 7, to 32.29 per dollar as of 3.44pm in Bangkok, according to data compiled by Bloomberg. It weakened 0.2% on Saturday after strengthening 0.8% over the previous three days and reaching a three-week high of 32.137 on Friday.

“Recent inflows of funds supported the baht amid easing political tension,” said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc in Tokyo. “As gains through yesterday were quite fast, it’s natural to see a correction before the weekend.”

One-month implied volatility in the baht, a measure of expected exchange-rate moves used to price options, slumped 49 basis points this week to 5.6%. The gauge declined one basis point, or 0.01 percentage point, on Saturday.

The National Economic & Social Development Board said on April 8 it may cut its 2014 expansion estimate for the country’s economy from the current range of 3% to 4% because of the impact from the political unrest that started in late October.

Government bonds rose for a third week. The yield on the 3.625 percent sovereign notes due June 2023 dropped 10 basis points from April 4 and two basis points today to 3.6 percent, data compiled by Bloomberg show. That’s the lowest since June.

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Thailand’s baht gained the most in more than three weeks and 10-year government bonds rose as data showed foreigners increased holdings of local debt.

The nation plans to issue 113 billion baht ($3.5 billion) of notes this quarter, compared with 138 billion baht a year earlier, official figures show.

The baht rose, tracking yesterday’s gains in some regional currencies, after US jobs data that trailed estimates pushed back the expected timetable for borrowing-cost increases. Thai officials will meet today to assess the possibility of setting a date for general elections.

Thailand’s currency appreciated 0.4% from April 4, the most since March 13, to 32.41 per dollar as of 11.08am in Bangkok, according to prices from local banks compiled by Bloomberg. Global funds bought $440 million more Thai debt than they sold last week, the biggest inflow since the five-day period ended Oct 18, official data show.

“Demand and supply conditions are supportive of bonds,” said Toru Nishihama, an economist covering emerging markets at Dai-ichi Life Research Institute Inc in Tokyo. “There may be some purchases of Thai assets as the political situation remains calm, but I don’t see aggressive buying as the unrest is unlikely to be resolved anytime soon.”

One-month implied volatility in the baht, a measure of expected exchange-rate moves used to price options, fell 35 basis points to 5.74% from the end of last week and reached 5.73% earlier, the lowest level since November.

The Constitutional Court last month invalidated a February vote and the Election Commission said March 21 it may be at least three months before a new vote can be held, keeping Prime Minister Yingluck Shinawatra’s government in caretaker mode.

Government bonds advanced. The yield on the 3.625% notes due June 2023 dropped two basis points, or 0.02 percentage point, from April 4 to 3.67%, the lowest level since March 17, data compiled by Bloomberg show.

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A gauge of expected fluctuations in Thailand’s baht dropped to the lowest level since December as concern eased the nation’s political unrest will deteriorate.

The baht traded in a range of 32.20 and 32.60 per US dollar on all but five days in the past month as an emergency decree was lifted after anti-government protesters removed blockades at four main intersections in Bangkok on March 3.

A gauge of consumer confidence fell in March to the lowest since October 2001 as demonstrations that began on Oct. 31 weighed on spending.

“The political situation has stabilized lately and that limits the downside for the baht, but the unrest is not completely solved which will also put a cap on the upside,” said Koji Fukaya, chief executive officer and foreign-exchange strategist at FPG Securities Co in Tokyo. “The baht may remain quite directionless for the time being and volatility will probably remain stable.”

One-month implied volatility, a measure of expected moves in the baht used to price options, dropped 27 basis points from a week ago to 6.03 percent as of 9 am. in Bangkok, according to data compiled by Bloomberg. The gauge declined seven basis points today and reached 6 percent earlier, the lowest level since Dec 24. Thailand’s currency dropped 0.2 percent today to 32.537 per dollar, taking this week’s loss to 0.1 percent.

Thai voters went to the polls on March 30 to select half of the nation’s Senate, without facing opposition from protesters who derailed a general election on Feb 2 and have vowed to disrupt any future vote.

Court Petition

The nation’s Constitutional Court agreed on April 2 to accept a petition filed by a group of senators arguing that Prime Minister Yingluck Shinawatra’s decision to remove the National Security Council secretary-general from office in 2011 was an unconstitutional abuse of power. A lower court ruled last month that the transfer was unlawful. It said Yingluck would have 15 days to prepare her defence.

Government bonds fell this week. The yield on the 3.625 percent sovereign notes due June 2023 rose four basis points from a week ago to 3.73 percent, data compiled by Bloomberg show. The rate declined one basis point, or 0.01 percentage point, today.

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Though the baht is weakening, the currency movement is in line with regional currency depreciation because of external factors prompting foreign investors to shift capital from emerging markets, says a senior Bank of Thailand official.

Chantavarn Sucharitakul, the assistant governor overseeing the financial markets operations group, said foreign investors had priced in domestic political factors, so the outflow is mainly due to the US Federal Reserve’s additional tapering of its monetary stimulus and political tensions in the Crimean peninsula.

Since the Fed’s recent announcement of its asset purchase pullback to US$55 billion from $85 billion, signs showing a faster recovery than expected in the US are driving the weakening trend.

The baht has been stable for the most part and its minimal movement reflects recent news developments both internally and externally, said Mrs Chantavarn.

Federal Reserve chairwoman Janet Yellen said the Fed’s monetary stimulus could end this fall, suggesting the US central bank could begin raising its interest rate six months after it halts its monthly bond-buying measure.

Foreign investors' move away from the Thai bourse has been in line with the movement of the SET, suggesting foreign investors are neither overweight nor underweight in their equities, said Mrs Chantavarn.

She said it is difficult to assess the outlook of the baht movement and capital flows as several factors are involved and news reports colour foreign investors' perceptions.

The financial market should be less volatile since pricing in the Fed’s continued tapering, she added.

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Thailand's baht was poised for its first weekly drop this month and bonds declined after the Federal Reserve said it may raise United States borrowing costs.

The currency fell the most since June on Thursday after Fed Chair Janet Yellen said interest rates may be increased about six months after the monetary authority ends its stimulus program later this year. The baht touched a three-month high on March 19, a day after Thailand’s cabinet approved ending the state of emergency that was imposed on Jan 22. The decree was lifted before it was set to expire on March 23.

"We have a mixed picture for the baht," said Paisarn Lertkowit, a currency trader at Bangkok Bank Pcl in the city. "The Fed comments should be dollar positive, but there was some easing concern among offshore investors about Thai politics that led to some baht demand."

The Thai currency fell 0.4% from a week ago, the biggest five-day decline since the period ended Feb 21, to 32.40 per US dollar as of 8.35am in Bangkok, according to data compiled by Bloomberg. The currency rose 0.2% Friday and touched a three-month high of 32.09 on March 19.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 19 basis points this week and seven basis points on Friday to 6.44%.

The Fed announced another $10 billion reduction of its monthly bond buying this week, to $55 billion, and said the purchases could end in the second half of this year.

Election decision

Thailand's Constitution Court is to decide whether to annul the Feb 2 general election on Friday. Results of the vote have not been tallied because protesters blocked candidates from registering and people from voting in some parts of Bangkok and the country's southern provinces, leaving the government in a caretaker role.

A prolonged political deadlock in Thailand lasting into the second half of the year may prompt a reassessment of its rating outlook, Andrew Colquhoun, head of Asia-Pacific sovereign ratings at Fitch Ratings, said in an interview in Singapore on Thursday.

The yield on the 3.625% sovereign bonds due June 2023 rose nine basis points this week to 3.8%, data compiled by Bloomberg show. The yield increased two basis points, or 0.02 percentage point, on Friday.

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Thailand's baht fell the most since January and bonds dropped on Federal Reserve Chair Janet Yellen's comment that interest rates could be raised "around six months" after the central bank ends its stimulus program.

The Fed announced another US$10 billion reduction of its monthly bond buying on Wednesday to $55 billion and said the purchases could end this fall. The Bank of Thailand reduced its key rate on March 12 to 2% from 2.25%after prolonged political unrest curbed local demand and hurt tourism. The Southeast Asian nation has room to ease policy further and whether the Bank of Thailand will cut or not depends on economic data, spokeswoman Roong Mallikamas said March 14.

"The prospect of a US rate hike is dollar-positive and weighs on emerging-market currencies," said Koji Fukaya, chief executive officer and foreign-exchange strategist at FPG Securities Co in Tokyo. "With lingering political unrest that hurts growth, there remains speculation Thailand may cut further."

The baht slumped 0.6%, the most since Jan 2, to 32.343 per dollar as of 8.37am in Bangkok, according to data compiled by Bloomberg. It rallied 1% over the previous five days. The currency has weakened 3.8% since anti-government protests began on Oct 31. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was little changed at 6.52%.

Thailand's economy may record zero growth or contract this year should the unrest continue, Thai Chamber of Commerce Chairman Isara Vongkusolkit said March 18 in Bangkok. Expansion is forecast at 2% to 3% in 2014 if a new government can be formed in the third quarter, he said.

The yield on the 3.625% sovereign bonds due June 2023 rose one basis point, or 0.01 percentage point, to 3.7%, data compiled by Bloomberg show.

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The baht climbed to a three-month high on Tuesday after the caretaker government approved lifting the state of emergency on Wednesday.

The baht climbed to a three-month high after the Cabinet approved the measure.

The currency rose for a fourth day, gaining 0.4% to 32.115 per dollar as of 1:50 p.m. in Bangkok. It touched 32.104 earlier Tuesday, the strongest level since Dec 18, according to data compiled by Bloomberg.

The baht has advanced 1.1% in four days, paring its net loss to 3.1% since the anti-government protests began on Oct 31.

"Easing political concern in Thailand is providing support for the baht," said Tsutomu Soma, manager of the fixed-income business unit at Rakuten Securities Inc in Tokyo. "The baht also benefited from improving global risk sentiment as the fading threat of conflict in Ukraine helped boost stocks."

Thailand's economy may record zero growth or contract this year should the political unrest continue, Thai Chamber of Commerce chairman Isara Vongkusolkit said at a news conference on Tuesday. Expansion is forecast at 2% to 3% in 2014 if a new government can be formed in the third quarter, he said.

Caretaker Deputy Prime Minister Yukol Limlamthong said the emergency decree, which was imposed on Jan 22, would be ended Wednesday, three days before it was scheduled to expire automatically on March 23.

Authorities will continue to use the Internal Security Act to control anti-government protests, he said. Thailand's benchmark share gauge rallied for a fourth day after the Standard & Poors Index of US stocks rose 1% on Monday.

One-month implied volatility in the baht, a measure of expected moves in the exchange rate used to price options, fell one basis point, or 0.01 percentage point, to 6.5%.

The yield on the 3.625% sovereign bonds due June 2023 rose three basis points to 3.69%, data compiled by Bloomberg show. The yield reached 3.65% on Monday, the lowest level since June 2013.

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Thailand’s three-year government bonds headed for their best week since November and the baht fell as the central bank cut borrowing costs.

The yield dropped to the lowest level since 2010 today after the Bank of Thailand lowered its benchmark interest rate to 2 per cent from 2.25 per cent on March 12, as expected by 16 of 26 economists surveyed by Bloomberg. The Constitutional Court will consider annulling the Feb 2 incomplete election and ruled on March 12 that Prime Minister Yingluck Shinawatra’s 2 trillion-baht ($62 billion) infrastructure bill was illegal.

“The rate cut was partly priced in before the meeting, but helped drag down yields and the baht after the decision,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Investors are keeping their eyes on political developments and, on that front, will stay on the sidelines for a while.”

The yield on the 4.125 per cent bonds due November 2016 dropped 11 basis points this week and one basis point today to 2.59 per cent as of 8:33am in Bangkok, according to data compiled by Bloomberg. That was the biggest weekly decline since the five-day period ended Nov 29.

The National Anti-Corruption Commission extended its deadline for Ms Yingluck to submit her defense statement over accusations of negligence in her role in overseeing the government’s rice-buying program by an extra 15 days from today, the commission said in a statement yesterday.

The baht fell 0.1 per cent from March 7 and was little changed today at 32.342 per dollar, data compiled by Bloomberg show. It has weakened 3.7 per cent since the anti-government demonstrations began on Oct 31, the worst performance among Asia’s 11 most-traded currencies after Malaysia’s ringgit.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined three basis points this week to 6.55 per cent. The gauge fell seven basis points, or 0.07 percentage point, today.

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Thailand's baht fell by the most in almost three weeks as United States data supported odds that the Federal Reserve will keep trimming monetary stimulus, while a slide in China's exports raised concern about regional growth.

The baht weakened for a third day after a report late last week showed US employers added 175,000 workers in February, the most in three months and more than the 149,000 median forecast in a Bloomberg survey. Exports from China, Thailand’s biggest overseas market, unexpectedly decreased 18% in February, the largest decline since 2009.

"The US data reaffirms the Fed will continue to taper, weighing on the baht," said Disawat Tiaowvanich, a currency trader at Bangkok Bank Pcl. "The bad data from China raised concern about regional exports. In addition, we have speculation of Japanese repatriation" of funds before the March 31 year-end, putting pressure on the baht, he said.

The baht fell 0.3%, the biggest loss since Feb 18, to 32.390 per US dollar as of 9.06am in Bangkok, according to data compiled by Bloomberg. The currency may trade between 32.35 and 32.75 this week, Mr Disawat said.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose three basis points, or 0.03 percentage point, to 6.6%.

The Bank of Thailand (BoT) will lower its benchmark interest rate to 2% from 2.25% on March 12, according to 16 of 25 economists surveyed by Bloomberg. The rest forecast no change.

Government bonds declined. The yield on the 3.125% notes due December 2015 rose one basis point to 2.26%, data compiled by Bloomberg show. The securities completed a fourth weekly gain on March 7.

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Thailand’s baht rose this week, after falling in each of the previous two periods, on increased fund inflows as anti-government protesters removed blockades at four main intersections in central Bangkok.

Global funds purchased $175 million more Thai equities than they sold this week through yesterday and poured a net $250 million into bonds, official data show. Consumer confidence fell to the lowest level since November 2001 amid political unrest that began in October, the University of the Thai Chamber of Commerce said yesterday. The currency reached a two-week high today after concern eased that Russia’s incursion into Ukraine will spark a broader conflict.

“Although political problems persist in Thailand, the direction of the situation is at least turning to better from worse and that spurred some inflows of funds and provided support for the baht and Thai assets,” said Koji Fukaya, chief executive officer and currency strategist at FPG Securities Co. in Tokyo. “Easing geopolitical risks in the global market from the Russia-Ukraine situation also helped emerging currencies.”

The baht strengthened 0.9 per cent this week and 0.1 per cent today to 32.272 per dollar as of 9:29am in Bangkok, according to data compiled by Bloomberg. It reached 32.22 earlier, the strongest level since Feb 18. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, rose six basis points from a week ago and four basis points today to 6.49 per cent.

Credit Ratings

Even as Thailand’s political turmoil weighs on the economy’s growth outlook, the sovereign credit profile remains consistent with its Baa1 rating, the third-lowest investment grade, and stable outlook, Moody’s Investors Service said yesterday in a statement.

The nation’s long-term foreign-currency rating was affirmed at BBB+, also the third-lowest investment ranking, by Fitch Ratings yesterday. Prolonged and more intense political tension could risk protracted economic weakness and erosion of confidence in the market, which could put pressure on sovereign creditworthiness, Fitch said in a statement.

Two-year government bonds were steady this week before a Bank of Thailand meeting on March 12. The central bank will lower the benchmark interest rate to 2 per cent from 2.25 per cent, according to 10 of 15 economists in a Bloomberg News survey. The rest predict no change.

The yield on the 3.125 per cent government bonds due December 2015 was little changed from Feb 28 at 2.27 per cent, data compiled by Bloomberg show. The rate rose one basis point, or 0.01 percentage point, today.

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Thailand’s baht fell the most in almost a week after explosions at anti-government protest sites killed four people over the weekend, adding to concern there is no end in sight for the unrest that is damaging growth.

Three people, two children and a woman, were killed when an explosion ripped through Bangkok’s main shopping district on Sunday and a five-year-old girl died in a separate blast in the eastern province of Trat on Saturday night, Feb 22.

The economy grew 2.9% last year, slowing from a revised 6.5% pace in 2012, and the National Economic and Social Development Board cut its 2014 expansion forecast this month to 3% to 4% from a previous range of 4% to 5%.

“The prolonged unrest will damage the economy and that’s also an underlying factor weighing on the local currency,” said Kozo Hasegawa, a currency trader at Sumitomo Mitsui Banking Corp. in Bangkok. “Losses in the baht may be limited by speculation of month-end demand from exporters.”

The baht fell 0.3% to 32.615 per US dollar as of 8.37 am in Bangkok, according to data compiled by Bloomberg. It has dropped 4.6% since the protests began on Oct 31, the most among the 11 most-traded regional currencies. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, declined three basis points, or 0.03 percentage point, to 6.59%.

Global funds sold $573 million more local equities than they bought this month through Feb 21 and offloaded a net $20 million of Thai bonds, official data show.

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Thailand's baht headed for its worst week this year amid concern prolonged political turmoil will deepen an economic slowdown.

Clashes between police and anti-government protesters left five people dead and injured at least 69 on Feb 18, prompting Moody’s Investors Service to warn the unrest may hurt Thailand’s credit profile if it stretches beyond the first half.

The economy grew 2.9% last year, after a revised 6.5% in 2012. The Bloomberg-JPMorgan Asia Dollar Index (ADXY) fell this week as minutes of the United States Federal Reserve's January meeting showed support for stimulus cuts and data from China missed estimates.

"The unrest in Thailand would keep downward bias on the baht," said Pareena Phuangsiri, an analyst at Kasikornbank Plc in Bangkok. "Global factors such as the Fed’s minutes and China data also impacted the baht and the Asian currencies."

The baht depreciated 0.6% this week to 32.525 as of 9.35am in Bangkok, the biggest five-day loss since the period ended Dec 27, according to data compiled by Bloomberg. The currency rose 0.2% on Friday.

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, dropped 10 basis points on Friday to 6.47%. It rose seven basis points, or 0.07 percentage point, this week.

Investors should sell the baht against the dollar before the weekend as Thai farmers plan to step up protests in Bangkok against payment delays in a grain purchase program, Credit Agricole CIB economist Dariusz Kowalczyk wrote in a note on Friday.

'Further instability'

"The risk of further instability over the weekend is high," Kowalczyk wrote.

A preliminary Purchasing Managers’ Index in China, Thailand’s largest export market, fell to a seven-month low in February, HSBC Holdings Plc and Markit Economics reported on Thursday. Several Fed officials back a continued decrease in bond purchases unless there is an “appreciable change” in the US economic outlook, the minutes released this week showed.

Thailand’s two-year sovereign bonds gained. The yield on the 3.125% notes due in December 2015 fell five basis points this week and one basis point today to 2.31%, data compiled by Bloomberg show. That’s the lowest level since the bonds were auctioned in 2010.

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The baht completed its biggest two-day loss in almost two months after clashes between anti-government protesters and police in Bangkok killed five people and wounded at least 66.

The baht weakened 0.3% to 32.55 per dollar as of 3.33pm, after touching 32.67 earlier, according to data compiled by Bloomberg. Its two-day loss to 0.9% was the most since Dec 20. The currency has depreciated 4.4% since the end of October, when the protests began.

''The baht is looking increasingly vulnerable,'' said Nicholas Spiro, London-based managing director at Spiro Sovereign Strategy. ``It's the bleak prospects for the already weak domestic economy, as the political standoff shows no signs whatsoever of being resolved in a peaceful manner.''

One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 13 basis points, or 0.13 percentage point, to 6.54%.

The yield on the 3.125% government bonds due December 2015 was little changed at 2.34%, data compiled by Bloomberg show. The yield has dropped 25 basis points this year.